Covestor model manager Global Equity Analytics and Research Services LLC (GEARS) – a proprietary learning-based electronic documentation interpretation software company – was founded by Robert Gay (pictured) . Prior to founding GEARS, Robert was Vice President and Director of Quantitative Research at Donaldson, Lufkin and Jenrette in New York. Robert was selected to Institutional Investor Magazine’s All-American Research team each year from 1990 through 1995. Here’s how Robert describes his motivation for founding GEARS:
Over the past decade, multiple changes in accounting policy and more frequent changes in corporate structure have made it much more difficult to keep track of the fundamentals of changing companies on an apples to apples basis. To meet this challenge, the GEARS team created learning-based electronic document interpretation software that acquires intelligence and data from a time-series document presentation. This patented time series search allows GEARS to acquire information more quickly and efficiently as the machine intelligence adapts to a growing periodic presentation of related electronic documents.
GEARS manages Covestor’s Earnings Surprise model, which is
Fundamentally based and driven by financial statement analysis… selects depressed share prices from the population of companies displaying a “Surprise Pattern” in the fundamentals.
Recently, GEARS sold Intel (Nasdaq: INTC) out of the model. Intel was recently downgraded by Canaccord Genuity analyst Bobby Burleson:
Further uncertainty this morning about how Intel’s (Nasdaq: INTC) Q1 report this month and Q2 forecast will look, courtesy of a note from Canaccord Genuity analyst Bobby Burleson, who reiterates a Hold recommendation on the stock while lowering his price target to $19 from $22.
Intel’s likely to offer a disappointing Q2 view, Burleson thinks, with expectations on the Street of a 10% to 15% rise in notebook sales likely to be undercut by the supply chain turmoil resulting from Japan, but also because Apple’s (Nasdaq: AAPL) iPad 2 tablet computer may cause notebook computers to “see weak sell-through” in the quarter. Also, Burleson thinks Advanced Micro Devices (NYSE: AMD) “may begin to regain some market share in servers with the launch of ‘Hercules’.” AMD has only 6% shares in servers, notes Burleson, which “appears unsustainably low.”
According to the Semiconductor Industry Association, the industry improved markedly in February:
Worldwide semiconductor sales totaled $25.2 billion in February, up 13.6% from the year-earlier period, the Semiconductor Industry Association said Monday. However, the SIA noted that the numbers “predate the March 11th earthquake and tsunami in Japan.”
Hao Jin of Seeking Alpha notes that INTC is currently the top “Dog of the Dow”:
However, “Dogs of the Dow“ didn’t seem to work in recent years. I fine-tuned it by picking the best stock from this list using following three criteria:
PEG Ratio: PEG ratios are used by investors on buying growth stocks at a reasonable price. If the ratio is less than 1, the stock may be undervalued. The lower, the better. In the list above, Chevron’s and Intel’s PEGs are lower than 1.
200-Day Moving Average: Given that they reflect the collective wisdom of millions of investors, the markets may be the best prognosticator we have. Best stocks need to be traded above its 200 MA. After all, trend is your friend.
Highest potential gain over the next 12 months: The 1-year target price estimate represents the median target price as forecast by analysts.
Star of the Dogs: Intel
Based on those three criteria, Intel is the best stock from the list: Low PEG, high potential return and traded above its 200-day moving average. Intel’s net income jumped 48 percent, mainly on strong demand from corporations for Intel’s higher-profit server chips. Besides, Intel is flush with cash, and recently its board authorized the company to buy back another $10 billion in stock.
Sources:
“Intel: Canaccord Cuts Q1, Year View On iPad, AMD Incursions” Tiernan Ray. Barron’s. 4/5. http://blogs.barrons.com/techtraderdaily/2011/04/05/intel-canaccord-cuts-q1-year-view-on-ipad-amd-incursions/
“Chip sales jump nearly 14% in February: SIA” Benjamin Pimentel. MarketWatch, 4/4. https://www.marketwatch.com/story/chip-sales-jump-nearly-14-in-february-sia-2011-04-04
“Intel Tops the Dogs of the Dow” Hao Jin. Seeking Alpha, 1/28. https://seekingalpha.com/article/249334-intel-tops-the-dogs-of-the-dow
