June 17, 2016

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VALUATION WATCH: Overvalued stocks now make up 38.86% of our

stocks assigned a valuation and 13.07% of those equities are calculated to
be overvalued by 20% or more. Eight sectors are calculated to be
overvalued.
MARKET OVERVIEW
Index

Started week

Friday PM

Change

Change %

ytd

DJIA

17830.5

17670.7

-159.80

-0.90%

1.41%

NASDAQ

4868.51

4808.15

-60.36

-1.24%

-3.98%

RUSSELL 2000

1162.53

1144.8

-17.73

-1.53%

0.78%

S&P 500

2091.75

2070.34

-21.41

-1.02%

1.29%

Summary of VE Stock Universe

Stocks Undervalued

61.14%

Stocks Overvalued

38.86%

Stocks Undervalued by 20%

26.68%

Stocks Overvalued by 20%

13.07%

SECTOR OVERVIEW
Sector

Change

MTD

YTD

Valuation

Last 12-M
Return

P/E
Ratio

Aerospace

-0.27%

-2.70%

-4.40%

1.79% undervalued

-4.67%

18.58

Auto-Tires-Trucks

0.13%

-2.86%

-3.19%

11.23% undervalued

-18.13%

11.78

Basic Materials

-0.43%

3.39%

32.94%

7.53% overvalued

19.68%

28.48

Business Services

-0.29%

-0.77%

10.31%

4.15% undervalued

-9.66%

22.6

Computer and Technology

-0.27%

-0.76%

6.10%

3.12% undervalued

-10.58%

27.32

Construction

0.10%

-2.22%

17.82%

7.33% undervalued

-5.64%

20.39

Consumer Discretionary

-0.21%

-0.91%

1.71%

4.63% undervalued

-12.51%

22.22

Consumer Staples

0.15%

-0.05%

4.65%

7.80% overvalued

2.25%

23.5

Finance

-0.06%

-2.07%

0.35%

5.57% undervalued

-6.22%

15.7

Industrial Products

-0.25%

-0.49%

4.91%

0.06% undervalued

-10.10%

21.45

Medical

-0.27%

-1.49%

-6.87%

9.99% undervalued

-23.00%

26.55

Multi-Sector Conglomerates

-0.43%

-1.37%

3.00%

1.55% overvalued

-9.44%

17.78

Oils-Energy

-1.16%

-1.07%

9.46%

0.95% undervalued

-32.82%

22.32

Retail-Wholesale

-0.46%

-1.53%

-5.16%

13.11% undervalued

-14.99%

21.83

Transportation

-0.64%

-2.53%

-0.42%

10.57% undervalued

-27.99%

13.18

Utilities

0.29%

-0.07%

6.14%

5.06% overvalued

3.55%

23.34

Sector TalkIndustrial Products

Below, we present the latest data on leading Industrial Products Sector stocks
from our Professional Stock Analysis Service. We applied some basic liquidity
criteria--share price greater than $3 and average daily volume in excess of 100k
shares. We have been following the sector closely of late because it has been
correlated so tightly to overall equity price moves.

Top-Five Industrial Products Sector Stocks--Short-Term Forecast Returns

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

BRSS

GLOBAL B&C HLD

27.24

21.37%

52.95%

IIIN

INSTEEL INDS

28.72

N/A

46.98%

CETX

CEMTREX NEW

3.35

N/A

4.69%

ACCO

ACCO BRANDS CP

10.44

30.94%

37.91%

WOR

WORTHINGTON IND

39.27

15.76%

43.06%

Top-Five Industrial Products Sector Stocks--Long-Term Forecast Returns

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

BRSS

GLOBAL B&C HLD

27.24

21.37%

52.95%

IIIN

INSTEEL INDS

28.72

N/A

46.98%

CETX

CEMTREX NEW

3.35

N/A

4.69%

ACCO

ACCO BRANDS CP

10.44

30.94%

37.91%

WOR

WORTHINGTON IND

39.27

15.76%

43.06%

Top-Five Industrial Products Sector Stocks--Composite Score

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

CCK

CROWN HLDGS INC

52.75

-10.94%

-3.97%

BERY

BERRY PLASTICS

37.42

-5.01%

10.42%

PKG

PACKAGING CORP

65.55

-6.67%

-2.37%

BGG

BRIGGS & STRATT

20.58

-6.83%

7.64%

TTEK

TETRA TECH NEW

29.8

-0.26%

17.97%

Top-Five Industrial Products Sector Stocks--Most Overvalued

Ticker

Company Name

Market Price

Valuation

Last 12-M Retrn

MRC

MRC GLOBAL INC

13.6

131.63%

-10.94%

DXPE

DXP ENTERPRISES

14.47

112.11%

-66.58%

TASR

TASER INTL INC

22.62

68.84%

-34.62%

ERII

ENERGY RECOVERY

8.93

45.27%

252.96%

ASTE

ASTEC INDS INC

55.22

41.35%

33.22%

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we are offering a FREE DOWNLOAD of one of our Stock Reports
Apple Inc. (AAPL) is engaged in designing, manufacturing and marketing
mobile communication and media devices, personal computers, and portable digital
music players. The Company's products and services include iPhone, iPad, Mac, iPod,
Apple TV, a portfolio of consumer and professional software applications, the iOS and
Mac OS X operating systems, iCloud, and a range of accessory, service and support
offerings. It sells its products worldwide through its online stores, its retail stores, its
direct sales force, third-party wholesalers, and resellers. Apple Inc. is headquartered in
Cupertino, California.
This week was the big Apple event, WWDC 2016. As has been the case lately,
the company announced a variety of incremental updates to existing products
rather than stunning their user base with some category-shattering device.
The latest iteration of the OS will be known as "Sierra" and will be released in
beta form in July. The big news here is a new capability to more fully integrate with
the cloud and across all Apple devices. Other developments include the porting of
the popular iPhone AI assistant/"concierge" function--Siri--to the company's desktop
computers, an expansion of the company's Apple Pay service to the web via the
Apple Safari browser, and a new OS for the Apple watch. In addition, the company
has updated its maps, news, and music services.

We often focus on Apple news because the company inspires such fanatical
loyalty amongst its user base, but once again what we see here is a rather lackluster
group of updates and changes that may not be enough to boost sales or attract
new users to the world of Apple.

As analysts have noted for along time now, the company was so successful for
so long that the big growth needed to support an ever-increasing share price was
simply unsustainable. This is not to say it is a bad stock, a bad company, or that their

products are not wonderful. But, the amount of explosive growth found when the
company developed the iPod, the iPhone, and the iPad, was simply unsustainable
because the company is just too large.
ValuEngine continues its HOLD recommendation on APPLE INC for 2016-06-16.
Based on the information we have gathered and our resulting research, we feel that
APPLE INC has the probability to ROUGHLY MATCH average market performance for
the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE
Earnings Growth Rate.
Read our Complete Detailed Valuation Report on Apple HERE.

ValuEngine Forecast
Target
Price*

Expected
Return

1-Month

97.58

0.03%

3-Month

98.35

0.82%

6-Month

99.75

2.26%

1-Year

97.91

0.37%

2-Year

105.71

8.37%

3-Year

103.44

6.04%

Valuation & Rankings

Valuation

8.46%
undervalued

Valuation Rank(?)

57

1-M Forecast Return

0.03%

1-M Forecast Return

Rank

53

12-M Return

-23.55%

Momentum Rank(?)

Sharpe Ratio

0.53

Sharpe Ratio Rank(?)

86

13.96%

5-Y Avg Annual Rtn

Rank

88

Volatility

26.18%

Volatility Rank(?)

Expected EPS Growth

-1.73%

EPS Growth Rank(?)

Market Cap (billions)

568.20

Size Rank

Trailing P/E Ratio

11.23

Trailing P/E Rank(?)

Forward P/E Ratio

11.42

Forward P/E Ratio

Rank

PEG Ratio

n/a

PEG Ratio Rank

Price/Sales

2.50

Price/Sales Rank(?)

Market/Book

4.68

Market/Book Rank(?)

Beta

0.98

Beta Rank

Alpha

-0.26

Alpha Rank

5-Y Avg Annual Return

34

64
22
100
86
73
n/a
37
25
46
26

Valuations Hover Near Normal Range

(Barely)
ValuEngine tracks more than 7000 US equities, ADRs, and foreign stock which
trade on US exchanges as well as @1000 Canadian equities. When EPS estimates are
available for a given equity, our model calculates a level of mispricing or valuation
percentage for that equity based on earnings estimates and what the stock should
be worth if the market were totally rational and efficient--an academic exercise to be
sure, but one which allows for useful comparisons between equities, sectors, and
industries. Using our Valuation Model, we can currently assign a VE valuation
calculation to more than 2800 stocks in our US Universe.

We combine all of the equities with a valuation calculation to track market

valuation figures and use them as a metric for making calls about the overall state of
the market. Two factors can lower these figures-- a market pullback, or a significant
rise in EPS estimates. Vice-versa, a significant rally or reduction in EPS can raise the
figure. Whenever we see overvaluation levels in excess of @ 65% for the overall
universe and/or 27% for the overvalued by 20% or more categories, we issue a
valuation warning.
We now calculate that 38.86% of the stocks we can assign a valuation are
overvalued and 13.07% of those stocks are overvalued by 20% or more. These
numbers have declined-- slightly-- since we published our valuation study in May-when the overvaluation was at 44.04%.
Not much has changed since our last valuation study, except we now know for
certain that the US presidential election will feature Trump vs. Clinton. But, that news
creates an uncertainty for sure, as Trump continues to make headlines almost every
day--seemingly every time he opens his mouth. Clinton offers a continuation of
Obama-era policies (which have generated booming markets, reduced deficits, and
economic recovery. It's tough to tell what Trump offers, because he has made so
many contradictory statements-- and his policies are often roundly panned by
analysts and economists.
Good news since our last report includes the recovery in the energy markets,
with oil prices recently closing above $50/barrel--of course, we've seen some erosion
in those oil prices since then, but it remains to be seen whether this is just "noise."Bad
news includes a May jobs report that showed bad numbers and some questions
about what many thought was a stronger, ongoing recovery.
This week's Fed meeting resulted in no changes--as expected. But, the Central
Bank is not giving any certainty to investors that they will refuse to hit the brakes on
growth yet again as we move forward. The last rate-hike move still seems premature,
as the labor market hasn't really benefitted from recovery in wages and inflation
remains nowhere to be found. The Fed struck a more cautious tone this week, noting
that the US economy had slowed amid concerns about the global economy more
generally.
As always, the balancing act between the dual mandate of control inflation
and foster full employment creates tension. we currently have low inflation and a job
market which is near "full employment" according to past standards, but it sure
doesn't seem that workers are benefitting from the recovery. That weak May jobs
report was the catalyst for caution, and caused Fed members to lose their inclination
to raise rates once again.

In addition, there is a concern that a UK "Brexit" might cause chaos in world

markets and thus a US move to slow growth would provide additional harmful effects.
And, the Fed--despite protestations to the contrary-- may be reticent to make moves
that could be seen as biased in the midst of a presidential election campaign.
Regardless, our valuation figures still show a near "normal" market.
The chart below tracks the valuation metrics from June 2015. It shows levels in excess
of 40%.

This chart shows overall universe over valuation in excess of 40% vs the S&P 500 from
June 2013

This chart shows overall universe under and over valuation in excess of 40% vs the S&P
500 from March 2007*

*NOTE: Time Scale Compressed Prior to 2011.

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