Dan Miley

Miley Fundamental Update

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Dear Friends,

Again, I apologize for not updating this portfolio more often.  I promise to do better.  I have dumped nearly all of the former stocks (for example, I dropped DST at 112 a few months ago).  But I am retaining AAPL, CELG, ORLY, and SKWS and adding 5 new picks.  Here is a round up of my thoughts:

  • Apple – I am maintaining my position in this one.  I believe that Apple is still a great pick, even if earnings only grow at an anemic rate of 6%, the stock is still undervalued and should be at least 128.
  • Celgene – Even with the recent bad news, I still think Celgene is undervalued and should sell for 116, a significant upturn from its current price.  Don’t expect instant gratification but I advise staying with them.
  • O’Reilly Automotive – I am maintaining my position in this one.  It is fairly valued at these levels so I wouldn’t buy more.
  • Skyworks Solutions – This stock has been pummeled along with Apple.  But I think it is still undervalued and should be accumulated.
  • United Therapeutics Corp (UTHR) – United Therapeutics Corp is a biotechnology company.   The company is engaged in the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening conditions.  This stock is my top pick.  With an ROE of 49% and expected growth north of 22%, I think that this one will be 200 by this time next year.
  • Avago Technologies (AVGO) – Avago Technologies Ltd is a designer, developer and supplier of semiconductor devices with a focus on analog III-V based products and complex digital and mixed signal complementary metal oxide semiconductor, or CMOS, based devices.  With an ROE of 35% and expected growth of 26%, I see this stock reaching 141  (it currently sells for about 126).
  • Taiwan Semiconductor (TSM) – Taiwan Semiconductor Manufacturing Co Ltd engages in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices; it also manufactures masks.  With an ROE of 30% and expected growth of 15% I see this stock reaching 41 from its current level of 21.
  • Gentherm, Inc. (THRM) – Gentherm, Inc. is engaged in the design, development, and manufacturing of thermal management technologies. The Company has two reportable segments for financial reporting purposes: Automotive and Industrial.  With an ROE of 27% and expected growth of 25%, I see this stock reaching 100 from its current level of about 39.
  • Maximus, Inc. (MMS) – Maximus Inc provides business process services to government health and human services agencies in the United States and to foreign governments.  With an ROE of 27% and expected growth of 19%, I see this stock reaching 64 in a year from its current level of about 52.

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    Miley Core Portfolio Update

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    Dear Friends,

    I apologize for not updating you on my portfolios.  Yes, I have been busy, but also I have been a bit reluctant to speak, given the poor performance of some of my picks.  But today, I will go over the Core Portfolio and offer my opinions and updates on each stock:

  • Dow – I am maintaining my position in this one.  I believe that Andrew Liveris is a competent CEO and that the DuPont merger will be successful.
  • IBM – I am sticking with this dog as I have little choice. All I can say is that Ginny Rometty has got to go!  The company needs new direction and dynamic leadership.   She has disappointed us for too long.  For evidence on how a new CEO can turn things around, just look at one of my other core holdings – McDonald’s.  As far a replacement for IBM as a core holding, Microsoft is a safer bet.
  • McDonald’s – I am maintaining my position in this one. Steve Easterbrook has turned the company around and I am glad held on.  As I said, a good leader can make a real difference in the success of a company.
  • Kraft and Mondelez – These consumer staples stocks are still a good holding. I trimmed my holdings in Kraft but still hold some.  You may want to consider a beverage company like Coke (KO) or maybe a spirits maker like Constellation Brands (STZ) in this area as a replacement or supplement to your holdings in this area.
  • Altria and Phillip Morris – I trimmed a bit of Altria but still have significant positions in both of these excellent dividend payers. Stay with these for income!
  • Pfizer – I added to my position in this drug powerhouse. Pfizer is a no longer a growth stock but the dividend is solid and safe.
  • Pittsburgh National – I sold my position in PNC as I am less than sanguine on financials. I think a position in an insurance giant like Travelers (TRV) is probably a better bet.
  • Southern – A good utility holding is always a good bet so I would stay with Southern. You may want to consider PPL Corp (PPL) as well.
  • United Technologies – I sold my position in UTX at 100 several months ago. I replaced UTX with General Electric (GE).  I like GE’s divesture of the bulk of their financial assets and it pays a better dividend than UTX.
  • Exxon Mobil – As most of you know, I have held Exxon for many years. It is the best managed oil major and oil prices will eventually recover.  Plus, its dividend is safe (despite what some pundits may say).

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    Miley Fundamental Portfolio Update

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    Hello, fellow investors.  I hope that this note finds you well and that your investments are doing well too. I hope that you took my advice on Skyworks Solutions since it is up about 54% since I recommended it in November.

    This month I have a new stock for your consideration. The stock is DST Systems (DST).   DST is a company engaged in providing technology-based service solutions for clients in the asset management, brokerage, retirement, insurance, healthcare and other markets. Basically, the copy provides “back-office” processing.  With increases in trading by both individual and institutional customers, I believe that this stock has solid growth opportunities for a long-term investor. Its P/E is 7.29, ROE is 49, and annualized 5-year growth rate is about 14%.   The stock is currently priced at about $ 108 and I put its intrinsic value at 316 so I rate this stock as a strong buy.

    Miley Core Portfolio Commentary

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    I am not making updates to the portfolio, but I do need to comment on some recent developments. Many of you are probably worried about IBM. I share your concern as the stock has grossly underperformed. I am going to give the CEO a few more quarters to show evidence of a turnaround before making a change. As for McDonald’s, I am also concerned with the CEO’s performance as results have been disappointing and some of his decisions have been questionable. But let’s give him some more time as well while we collect our dividends.   As to United Technologies, I was surprised to hear of the resignation of the CEO today (11/24). That is troublesome but again let’s wait and see because I think UTX is a solid company with good growth prospects in several areas.   Finally, as to Verizon, which was recently downgraded, I am not worried. The stock is still cheap at 14 times forward earnings and it pays a solid dividend. So hold on despite what Citibank says.

    Miley Fundamental Portfolio Update

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    I finally have some updates for the portfolio.  I am dropping DXPE and KLIC.  DXPE has performed well but I think there are better choices, while KLIC has gone nowhere.  In their place, I am buying Outerwall (OUTR) and Skyworks Solutions (SWKS).  Outerwall is the operator of Redbox and Coinstar kiosks.  Even with today’s outside gains due to the announced price hike in Redbox prices, I think that the stock is grossly undervalued as the intrinsic value is about 148.  Revenue growth over the past 5 years was 29%, EPS growth was 46%, return on equity is 33% and estimated earnings growth is about 18%.  As for Skyworks Solutions, they are an innovator of high reliability analog and mixed signal semiconductors.  I put its intrinsic value at about 92, so the stock is undervalued as well.  Past revenue growth was 23%, EPS growth was about 33%, return on equity is almost 20% and estimated earning growth is about 19%.  I think both of these stocks are great choices for the coming year.

    Greetings from the co-manager

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    Folks, welcome to the new website.  Mark Bates has selected new software for posting messages and portfolio updates.  I am researching new opportunities as well as reviewing the Miley Fundamental and Core Fund current holdings.  I will provide an update soon.  Until then, happy investing!