Below is a summary of 22 AFG Buy Recommendations from the S&P500 Index. The report highlights the 2 companies from each sector (ex. financials) that have the most attractive value score and are currently rated Buys by The Applied Finance Group, Ltd. (AFG). Factors used to derive a AFG’s recommendation include: Expected change in Economic Margins, Intrinsic Value, and Management Quality.

We also ran a VE analysis and provided the results. The VE analysis of each company is used to identify implied sales growth expectations versus what the company has delivered historically in sales growth over the past 5 years. Measuring the spread between a company’s VE sales growth expectations and what it has historically delivered should give you a good idea of which companies have the best chance of meeting or exceeding those expectations, and thus are more likely to outperform.

Cheapest Companies In The S&P 500 By Sector (ex. Financials)

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Click Here, to see results of our portfolio performance using AFG's Buy/Sell criteria

A brief description of AFG's buy criteria variables is below:

• Economic Margin - A corporate performance measurement that addresses the gaps in GAAP, eliminating distortions caused by accounting policies to measure what a company is truly earning above or below their cost of capital.

• Valuation Model – Using AFG’s modified discounted cash flow model to measure the intrinsic value of a firm compared to its peers.

• Management Quality – Assess management’s ability to make wealth creating decisions.

Applied Finance Group’s (AFG’s) Value Score defined - A score which represents the ranked percent to target (deviation between stock’s current trading price and AFG’s current default target price) or attractiveness (upside) relative to the universe. A Value Score of 100 is the most undervalued and 0 is the most overvalued company in the universe.

VE Sales Growth - AFG’s Value Expectations allows us to understand the Sales Growth, EBITDA Margin, and Asset Turnover a company has to deliver in the future to justify its current trading price. In theory, if the imbedded future performance is very conservative relative to the company’s historical performance, the stock is regarded as undervalued. The VE Sales Growth displays the implied future Sales Growth of the company assuming their EBITDA Margins and Asset Turnovers stay at the 5 year historic median levels.


ValueExpectations.com, by the founders of The Applied Finance Group and Toreador Research and Trading, is a stock blog and investment newsletter that provides institutional quality equity research using AFG’s proprietary Economic Margin framework.

Labels: investing, stock investing, stock investments, stocks

Investing in bonds can be very simple yet equally as profitable as risking your money on the stock market. A bond is, in effect, a loan that a person makes to a company in exchange for the promise that they will receive back their full initial investment plus interest. If a person buys into a bond and then holds onto it, it can be a very simple investment with no surprises. There are a few different types of bond, one of the most popular being insurance bonds which can offer the plan holder a guaranteed income for life.

There are two main ways to make money from a bond. The first and most simple way is to hold onto it until it matures. This is the stage where you will receive back your initial investment, plus regular interest payments as long as you keep hold of it. The alternative way is to sell the bond for a higher price than you paid for it. Bond prices go up when interest rates drop, so you can make money early, by selling it before it matures. You should get more than you initially paid for it, plus the interest you’ve accrued until that date.

However, there are ways in which you can lose money on bonds, just as with any investment you make. The opposite to what was mentioned previously is that if interest rates rise, bond prices will fall and if you have to sell your bond for some reason, you are likely to make a loss. If you invest in bonds that are issued by a financially unstable company, there is no guarantee that you will receive the full repayment of your investment or the interest. If the company comes under serious financial difficulty, then you might not receive anything back of what you initially invested.

Before purchasing a bond, you should always seek legal advice as it is quite a considerable investment and you need to be fully aware of the problems you might encounter, only two of which are mentioned in this article. However, on the whole, bonds are a safe investment and you can make good money if you invest wisely and keep a close eye on the stock market. Being aware of market changes, and potential market changes, is crucial, because the sooner you can make a decision to buy or sell a bond, the better.

There are also a few types of bonds that aren’t designed with the intention of making money. People invest in these as a form of guarantee; such as if they have hired a contractor to complete a job, then the bond will ensure their performance so that the investor does not lose any money on the project.

The author of this article recommends the experts at Bryant Surety for all types of bond such as surety bonds, performance bonds and mortgage bonds.

Labels: bonds, investing, investment advice, mortgage bonds, surety bonds

Most people understand what a mutual fund is and think a hedge fund investment is the same thing. They are correct in that a hedge fund is a group of investors that pool their money, just like a mutual fund. Hedge funds, however, don’t have the same type of regulation that the mutual fund has. In fact, you have to have a specific amount of wealth to invest in a hedge fund and a required amount of investment savvy. A hedge fund investment is not a public offering, but often a private limited partnership with the fund manager as the general partner.

Hedge funds do things because it is a private investment, which regular mutual funds can’t do. One example is the ability to sell short. This is a risky technique especially if it’s a naked short sale. The short sale is when you sell a stock in hopes of purchasing it later at a cheaper price to fill the sale.

A naked sale is one where you sell a stock you don’t own. To comply with government regulations you must be able to borrow it from someone before you sell it. The reason that it’s so risky is that the price could skyrocket after you sell the stock. Then you must pay huge amounts to fulfill your obligations to the buyer.

When large hedge funds use the techniques, often they drive the price down artificially in the sale of the stock and minutes later, can make a quick profit with the purchase and delivery of the cheaper stock. This is one way a hedge fund investment brings higher income than the traditional mutual fund.

The original purpose of a hedge fund was to hedge against the market’s swings. The combination of different types of investments provided an equation against falling markets. The change came as hedge funds became more popular. Today, they provide not just a hedge against loss but an edge for gain.

The typical hedge fund investment contains derivatives that are high yield and debt from companies considered risks, so they have to pay more to borrow, or their loans sell at discounted rates which means the yield on the return is higher. If you use a $1,000 loan as an example, with the company loan rate at 8%, that is a decent comfortable return. Now, if that same company gets behind on the loan and the lending institution panics, they might sell it at a 50 percent reduction of the balance to the hedge fund. This in effect means that not only does the fund get 16 percent interest, but if the company actually pays the loan in full, they make a 100 percent gain on that money.

If you have plenty of money already, you may be the perfect candidate for a hedge fund investment. These types of investments are supplementary to normal investments. They attempt to defeat bear markets and bring in money while they also take advantage of the bull market and yield a higher return. There are risks in a hedge fund, ones that the average investor would never take. With the onset of a bear market, the technique of short selling is one of the best ways to hedge the bad market and take the lemon that the economy handed you and make lemonade.

For more insights and additional information about profits in a Hedge Fund as well as getting free reports about hedge fund investing, please visit our web site at http://www.hedge-fund-advice.com

Labels: hedge fund, investing, investment advice

When you are talking to someone about the forex rate, what is it exactly that you are referring to? You are referring to the relative value between two different currencies, or how does one currency compare to the other one. For example, if the US dollar has a value of "1" at a given point, the value of the British dollar (pound) by comparison is at "1.8369". These are example numbers only but hopefully it will help you understand.

The forex rate is the most critical thing to be considered for a forex trader because he needs to determine how that rate will change amongst the various world currencies. If you have the desire and motivation to be involved with forex trading, learning about forex rates is critical to your success.

To be successful with your forex trades, you will be looking at forex rates constantly during the day. One of your tasks is to thoroughly examine the various trends in the countries and predict how these factors will impact the value of the country's currency. For example, if all the factors you are watching, including the rate, seem to indicate that the British pound is beginning to increase in value compared to the Euro, you might want to consider swapping your Euros for British pounds. But it does not stop there, because as you continue to watch the rates, even on the same day, it may show that the British pound has become strong again, so then you would swap back again and realize a handsome profit because now the British pound is worth more than you paid to acquire it.

The factors that influence the forex rates are just about any social, economic, or political event that is occurring in that country at a given time. Is this a lot of data to consider? It absolutely is, but at the same time, it is imperative that as many of these variables be taken into account so you can make the best trade decisions possible.

Many of the most successful traders in the forex market use some type of forex software package to help them with all this analysis. The software will not make the trades for you automatically without you having to indicate that you do want to do a trade, but simply based on the sheer volume of data that needs to be evaluated, there is some very good forex trade software out there. Our web site outlines one of the best forex software packages available anywhere that has an outstanding track record.

Forex trading is not for the faint of heart. Even the most successful forex traders will occasionally make an unprofitable trade. But the key to the whole thing is to learn from such mistakes and to minimize your losses, which again is one of the key ingredients to the software package showcased at our web site. Your knowledge of forex rates and forex trading, combined with the experience you gain along the way will guide you to the incredibly profitable rewards that are associated with successful forex trading.

For more insights and additional information about understanding how a Forex Rate plays a role, as well as a review of one of the best forex trading software packages available anywhere, please visit our web site at http://www.forexcurrencysystems.com

Labels: currency trading, forex, investing