How Jumbo Gains are Possible Using Model Price – Part 2

OK, so I hate when so called experts in the financial markets look backwards and select an example of a stock that had big gains and said I told you so.  I call bullshit quite frequently on these individuals and tune out whatever they are recommending or better still selling.

So for the last year I have been highlighting specific names that have been transiting above EBV-3 or “Coming out of the Blue” as I call this specific investment strategy.  I have selected 5 of them to see what has happened and obviously keep on eye on these stocks in the next few years as these stocks continue to transit through their respective EBV levels and generate generous rates of return for their investors.

Sun Life Financial

I highlighted Sun Life Financial – SLF on February 28, 2012.  Here is the model price chart I included in the blog.

Sun Life with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Here is the model price chart as of the close on Friday, February 15, 20013.

Sun Life Financial with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Sun Life Financial with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Sun Life is up 34.13% since the blog post and with the addition of dividends is up 40.86%.  As you can see SLF had a positive transit of EBV-2, on the first week on November and is trading at the top of the zone.  I would be patient with this name and continue to hold the position, enjoying the hefty dividend from my original purchase price.

Financial stocks, usually want to trade at EBV or green line when conditions are normal.  Sun Life traded as high as EBV+2 back in 2005 to 2007 when financial conditions were optimal.

Manulife Financial

The other life insurance company in Canada, Manulife Financial – MFC finally had a positive transit of EBV-3 on December 12, 2012.  MFC had a false “break out” back in March 2012 however couldn’t stay above EBV-3 with a negative transit back on the first week of May.  Here is the model price chart I included in my “Coming Out of the Blue” (Again)! blog.

Manulife Financial with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Manulife Financial with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Here is the model price chart as of the close on Friday, February 15, 20013.

Manulife Financial Corp. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Manulife Financial Corp. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

As you can see MFC had a positive transit of EBV-2 this week, which is very positive.  You will also note that our model price calculation is above its current trading price, which again is also positive.  Manulife is up 18.47% since my blog post and with the addition of dividends is up a total 19.46%.  Certainly before the financial crises of 2008, Manulife consistently traded in and around EBV+2.

First Solar Inc.

I highlighted First Solar on November 28, 2012.  Here is the model price chart I included in the blog.

First Solar with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Here is the model price chart as of the close on Friday, February 15, 20013.

First Solar Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

First Solar Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

First Solar is up 25.28%% since the blog post.  As you can see FSLR had a positive transit of EBV-2 in the first week of January of 2013, and subsequently traded down but not through EBV-3.  Sometimes its important to give these positions some room to maneuver but also sell when the position transits down through EBV-3.

This one time high flyer traded well above EBV+5 back in 2009.  Will FSLR trade there again?  Time will tell.

Goldman Sachs

Goldman Sachs (GS) finally had a positive transit of EBV-3 on December 18, 2012, noted here.  GS had a false “break out” back in February 2012 however couldn’t stay above EBV-3 with a negative transit back in the middle of April.  Here is the model price chart I included in my “Coming Out of the Blue” (Again)! blog.

Goldman Sachs with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Goldman Sachs with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Here is the model price chart as of the close on Friday, February 15, 20013.

Goldman Sachs with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Goldman Sachs with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Goldman is up 21.53% since the blog post.  Since I noted GS’s transit back on December 18, 2012 the stock price has pushed forward with a positive transit of EBV-2.  Back in 2000, Goldman traded as high as EBV+3.

BlackBerry Inc.

I highlighted BlackBerry on November 28, 2012, here.  I have reproduced the model price chart I included in this blog.

Research In Motion with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Here is the model price chart as of the close on Friday, February 15, 20013.

BlackBerry Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

BlackBerry Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

BlackBerry is up 21.40% since the blog post.  Since I noted BBRY transit back on November 25, 2012 the stock price has pushed forward with a positive transit of EBV-2 and EBV-1.  Back in 2000 and recently in 2008 BBRY has traded as high as EBV+9!

Conclusion

So I think I have made my point.  I have selected 5 “Coming Out of the Blue” situations I have previously noted in prior blogs out of many.  There have been a lot of companies over the last six months transiting over EBV-3 and I have tried to note the bigger companies and/or interesting situations for my readers.  Yes, these noted situations are up nicely since I blogged about them.  My point however is the above noted companies have the potential to increase many hundredfold over the next 3 to 5 years if investors are patient.  Over time with each positive transit of each successive EBV line gives confidence to the investor that future gains are still possible even though sitting on substantial unrealized gains doesn’t make the investor nervous of possible significant reversals.  This, in my estimation, is the key for jumbo returns I have noted in the title of this blog.

I am not recommending any of these stocks to anyone, just merely pointing out one very lucrative trading strategy that is unique to model price users, if interested.

4 responses to “How Jumbo Gains are Possible Using Model Price – Part 2

  1. Charles Couch February 20, 2013 at 2:32 pm

    I note from your Web site that, although Citi Group (C-N) has not come “Out of the Blue” you have included it in your US fund. I was wondering if you would mind sharing how your analysis identified this as a “Top Ten” choice?
    I have owned this for some time and its doing very well on the long side.
    I follow you on Face book and I tune into your Web site at least monthly (early in the month) to identify you changes in the top ten for your Canadian and US fund.

    Regards

  2. ModelPrice Guy February 20, 2013 at 2:41 pm

    Charles Joseph Kerr beat you to the question on the Facebook comments section. I have reproduced his question and my answer. Hope this helps!

    Hi Brian. I see that you have C-us and MET-us in your US Select Value 50 fund as of Feb. 1. Both of these stocks are below EBV-3 so they haven’t come out of the blue yet. MET-us, especially, seems to still have a ways to go to get there (closed today at $37.61 and EBV-3 is around $51) but does have good upside to model price. Can you comment as to why you feel confident buying these stocks even though they are below EBV-3? Thanks.
    Like · Reply · Moderate · Unfollow Post · February 5 at 11:38pm

    ModelPrice Guy · 53 years old
    Great question Joseph! First, my VP Research Enrico Sgromo and Portfolio Manager John Cushing make the final decisions on investments in the US Select Value 50. Second, when I invest for myself and writing in my blog I much prefer different investment plays – my objectives. “Coming out of the Blue” strategy is a very high reward low risk investment strategy that I wanted to not only highlight to you and others but also I can take sizeable investment positions with confidence so I can sleep at night. Thirdly, there is no question both C and MET will trade up to EBV-3 sometime. It’s just a matter of when not if! And when they do, along with a positive transit, I will be there making an investment and blogging about. So I guess it boils down to what your objectives are. Mine, are always to maximize reward with little to no risk no matter how much I trade. The fund objectives are for price appreciation trying to minimize turnover, and use upside to model price (which I have a sizeable chunk of my investment dollars in). As I have said in a few blogs, model price work can be used in a lot of ways. I have my way. The fund has its way (in line with stated objectives). What is your way?

  3. kliknij tu April 9, 2013 at 10:40 pm

    Hello would you mind letting me know which web host you’re using? I’ve loaded your blog in 3 different internet browsers and I must say this blog loads a lot faster then most. Can you suggest a good web hosting provider at a reasonable price? Kudos, I appreciate it!

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