April 15, 2011

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Free Report Download for Subscribers

As a bonus to our Free Weekly Newsletter subscribers, we are now
offering a FREE DOWNLOAD of one of our $ 25.00 Detailed Valuation
Reports.
This week's free download is our report on Bank of America Corp (BAC). Bank of
America Corp. is one of the world's leading financial services companies. Bank of
America provides individuals, small businesses and commercial, corporate and
institutional clients across the United States and around the world.
Along with Citigroup, Bank of America Corp remains among the financial crisis'
"walking dead" and reported a big miss with its latest earnings report. Still the biggest
bank in the US, Bank of America Corp saw profits decline 36%. Analysts expected
earnings of roughly $0.27/share but the company reported at $0.17/share. Revenues
declined for five out of six critical businesses year-over-year.
ValuEngine has issued a HOLD recommendation for Bank of America Corp on
Apr. 15, 2011. Based on the information we have gathered and our resulting research,
we feel that Bank of America Corp has the probability to ROUGHLY MATCH average
market performance for the next year. The company exhibits ATTRACTIVE company
size and market valuation, but UNATTRACTIVE momentum and 5-year annualized
return.
Based on available data as of Apr. 15, 2011, we believe that BAC should be
trading at $17.88. This makes BAC 26.58% undervalued. Fair Value indicates what we
believe the stock should be trading at today if the stock market were perfectly
efficient and everything traded at its true worth. For BAC, we base this on actual
earnings per share (EPS) for the previous four quarters of $0.88, forecasted EPS for the
next four quarters of $1.53, and correlations to the 30- year Treasury bond yield of
4.54%.
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MARKET OVERVIEW

Index started week Thursday Close 4 day change 4 day change % ytd
DJIA 12380.43 12285.15 -95.28 -0.77% 6.30%
NASDAQ 2789.49 2760.22 -29.27 -1.05% 3.89%
RUSSELL 2000 841.54 827.47 -14.07 -1.67% 5.72%
S&P 500 1329.01 1314.52 -14.49 -1.09% 4.67%

Summary of VE Stock Universe

Stocks Undervalued 41.29%
Stocks Overvalued 58.71%
Stocks Undervalued by 20% 17.06%
Stocks Overvalued by 20% 26.64%
SECTOR OVERVIEW
Sector Change MTD YTD Valuation Last 12- P/E
MReturn Ratio
Aerospace -0.43% -3.14% 12.26% 7.21% overvalued 16.47% 19.08
Auto-Tires-Trucks -1.00% -5.79% -8.02% 4.09% overvalued 26.18% 19.76
Basic Materials 0.28% -1.79% -0.76% 9.42% overvalued 43.09% 25.44
Business Services 0.39% -1.16% 4.44% 8.60% overvalued 10.43% 50.58
Computer and Technology 0.17% -1.59% 10.25% 6.00% overvalued 24.40% 45.02
Construction -0.33% -3.74% -1.40% 5.08% overvalued 0.52% 33.89
Consumer Discretionary 0.33% -0.47% 4.91% 4.11% overvalued 9.50% 32.9
Consumer Staples -0.22% -0.61% -0.90% 9.19% overvalued 12.45% 19.17
Finance 0.20% -1.74% 1.62% 5.79% overvalued 2.89% 25.75
Industrial Products 0.35% -3.59% 3.83% 8.10% overvalued 18.35% 29.97
Medical 0.17% 0.03% 12.28% 1.90% overvalued 9.52% 37.98
Multi-Sector Conglomerates -0.12% -1.38% 3.47% 14.21% overvalued 22.68% 29.69
Oils-Energy 0.57% -3.61% 9.48% 19.85% overvalued 34.40% 47.26
Retail-Wholesale 0.22% -0.73% 4.77% 6.69% overvalued 13.77% 28.82
Transportation 0.23% -2.72% -1.44% 12.00% overvalued 11.35% 21.55
Utilities 0.51% -0.76% 4.16% 10.68% overvalued 14.95% 21.4

Sector Talk—Finance
Below, we present the latest data on the Finance Sector from our Institutional
software package (VEI). These results were filtered by market price and volume--no
results below 3$/share or less than 100k shares/day volume.
Top-Five Finance Sector Stocks--Short-Term Forecast Returns
Ticker Name Mkt Price Valuation(%) Last 12-M
Retn(%)
MBI MBIA INC 8.93 -17.88 12.47
HTH HILLTOP HLDGS 9.6 N/A -17.17
FAF FIRST AMER FINL 15.5 -3.16 N/A
NCT NEWCASTLE INV 5.69 -69.96 46.27
SFE SAFEGUARD SCTFC 19.22 -75 37.48
Top-Five Finance Sector Stocks--Long-Term Forecast Returns
Ticker Name Mkt Price Valuation(%) Last 12-M
Retn(%)
MBI MBIA INC 8.93 -17.88 12.47
HTH HILLTOP HLDGS 9.6 N/A -17.17
FAF FIRST AMER FINL 15.5 -3.16 N/A
SFI ISTAR FINL INC 9.08 -11.27 40.34
MIM MI DEVLPMNTS -A 28.49 N/A 112.61

Top-Five Finance Sector Stocks--Composite Score

Ticker Name Mkt Price Valuation(%) Last 12-M
Retn(%)
DFS DISCOVER FIN SV 23.95 -0.29 50.25
SFE SAFEGUARD SCTFC 19.22 -75 37.48
GGAL GRUPO GALIC ADR 13.28 -3.01 112.14
ACAS AMER CAP LTD 9.55 -14.13 71.76
AHT ASHFORD HOSPTLY 11.05 -36.72 29.39

Top-Five Finance Sector Stocks--Most Overvalued

Ticker Name Mkt Price Valuation(%) Last 12-M
Retn(%)
GRT GLIMCHER REALTY 9 208.6 39.1
LAB LABRANCHE & CO 4.19 167.45 -29.22
LXP LEXINGTON PPTY 9.36 151.89 34.1
CNO CNO FINL GRP 7.49 122.35 13.48
CLP COLONIAL PPTYS 19.22 111.25 28.82

Subscribers can check out the latest valuation, forecast, and ratings figures on
the Finance Sector from our Models HERE.
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What's Hot—Latest FDIC Report is Posted
Richard Suttmeier Warns of Continued Housing/Banking
Trouble in Latest ValuEngine FDIC Report
ValuEngine Chief Market Strategist Richard Suttmeier is an expert on the US
Banking System and uses the health of the system as a leading economic
indicator. He distills his thoughts on the banking system in our FDIC Report. The latest
update of the report is now available.
In his summary of the report he notes the following:
In its most recent statement, the Federal Reserve said that the economic
recovery is on firmer ground with an overall gradual improvement in the labor market.
While the Fed recognized that commodity prices are putting upward pressure on
inflation, they argued that this is temporary. They recognized the sharp run-up in
energy costs-- caused by supply concerns, but left their blinders on by asserting that
longer-term inflation expectations are stable-- with underlying inflation still subdued.

Why is it that the FOMC still believes that Americans do not need to eat or buy
gasoline?
The Fed will continue to expand their balance sheet via the $600 billion QE2--
which continues through June --and they will continue to buy US Treasuries to replace
maturing mortgage-backed securities. In addition, they are continuing to keep the
federal funds rate at zero to 0.25%.
However, in my view the key to the Main Street economy is the housing market
as well as nonresidential construction. The housing market is normally 15% of the US
economy but it has been depressed since home values peaked in mid-June 2006.
Until we see improvement there, we will not be able to sustain the recovery.
Meanwhile, Community banks declare that they were not the cause of “The
Great Credit Crunch,” despite the fact that they participated by extending
commercial real estate (CRE) loans-- including construction and development (C&D)
loans-- with loan commitments well above the regulatory guidelines versus risk based
capital. We all know the saga of the regional banks, but even now those “troubled
assets” remain hidden on their balance sheets—and this problem extends to those still
considered “too big to fail.”
 I recently published a research note on Forbes.com which featured critical
FDIC asset data from the 2001 through 2010 period. This data shows that several asset
classes have expanded at a faster pace relative to Current Dollar GDP. This indicates
that the banking system remains over-leveraged.
For more proof that banks remain in perilous condition, consider the fact that
25% of all FDIC-insured financial institutions reported a net loss in the 4th quarter.
Rather than being indicative of a strong recovery, reported improvements in quarterly
earnings are largely the result of lower loan-loss provisions.

We are NOT Out of the Woods Yet!

A critical portion of this report is the ValuEngine List of Problem Banks. Problem
banks are publicly traded FDIC insured financial institutions who are overexposed to
Construction & Development Loans and/or Nonfarm nonresidential real estate loans,
with “1-Engine”--Strong Sell, or “2-Engine”—Sell. The report also includes a listing of all
other engine-rated banks-- and those with “n/a” ratings but forecast figure data
points according to our models-- in violation of FDIC guidelines vis-a-vis loan
exposures.
As of April 8, 2011, there were 232 banks overexposed to C&D and/or CRE loans
in the ValuEngine database with full data coverage. There were two additional
overexposed banks with partial data coverage.Of the overexposed banks with full
data coverage, 55 were rated “1-Engine” Strong Sells, 65 were rated “2-Engine” Sells,
104 were rated “3-Engine” Holds, and six were rated a “4-Engine” Buy. There were no
Strong Buy-rated banks on the list This means that there are currently 120 banks rated
Sell or Strong Sell that are also overexposed to C&D and/or CRE loans. There are 291
additional institutions listed as a problem bank list that do not appear in the
ValuEngine database but are carrying C&D and/or CRE loans in excess of the FDIC
guidelines.

Our latest ValuEngine FDIC Report is now posted. The report contains
loan exposure and/or ValuEngine datapoints on valuation, forecast, and
ratings for all of the institutions on our List of Problem Banks.

Subscribers can download it HERE.

Valuation Watch Continues
ValuEngine Market Valuation Figures Decline into Normal Range
The ValuEngine Valuation Model tracks more than 5500 US equities, ADRs, and
foreign stock which trade on US exchanges. The model calculates a level of
mispricing or valuation percentage for each equity based on 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.
We track valuation figures and use them as a metric for making calls about the
overall state of the market. Whenever we see levels in overvaluation levels in excess
of @ 60% for the overall universe and 27.5% for the overvalued by 20% or more
categories, we issue a valuation watch.
We issued our latest Valuation Watch with the SP 500 at the 1319 level and the
overall universe valuation figure at 60.89%. We ended the watch on April 13th with the
SP 500 at 1314.16 and the overvaluation at 58.64%. Currently, overall universe
valuation figure is at 58.71% based on yesterday's SP 500 close of 1314.52. We will
continue to watch this metric and stand ready to re-issue our Valuation Watch if the
numbers start to creep up again..

Suttmeier Says
--Commentary and Analysis from Chief Market Strategist
Richard Suttmeier
If you have any comments or questions, send them to
Rsuttmeier@Gmail.com

Treasury Yields
10-Year-- (3.485) Daily, annual and quarterly value levels are
3.609, 3.796 and 4.016 with weekly, monthly, annual, and
semiannual risky levels at 3.293, 3.181, 2.690, 2.441, and 2.322.
Commodities and Forex

Comex Gold-- ($1475.1) Annual and semiannual value levels are $1356.5 and $1300.6
with my semiannual pivot at $1452.6, and daily, weekly, quarterly and monthly risky
levels at $1493.8, $1503.27, $1523.7 and $1559.9. A new all time high was set this
morning at $1480.5.

Nymex Crude-- ($108.40) Annual and monthly value levels are $101.92, $101.09 and
$99.91 with semiannual and daily pivots at $107.14 and $109.06, and quarterly and
weekly risky levels at $114.27, $120.52 and $121.60.

The Euro-- (1.4488) My monthly value level is 1.4170 with a quarterly pivot at 1.4308,
and daily, weekly and semiannual risky levels at 1.4591, 1.4615 and 1.4624.

Major Indices

The Dow Industrial Average held my weekly value level at 12,161 on Thursday. It
appears that negative weekly chart profiles will be delayed for another week, so a
confirmation of a doubletop for the major equity averages will have to wait. This
requires declining weekly technical momentum (12x3x3 weekly slow stochastic
readings) and weekly closes below the five-week modified moving averages at;
12,162 Dow Industrials, 1312.5 S&P 500, 2749 NASDAQ, 2313 NASDAQ 100, 5185 Dow
Transports, 821.07 Russell 2000 and 439.67 SOX. We could have mixed weekly closes
this week followed by a confirmation next Friday.

Key Levels for the Major Equity Averages

Dow -- (12,285) Weekly, annual and semiannual value levels are 12,161, 11,491,
10,959, and 9,449 with a daily pivot at 12,288, and monthly, quarterly and
annual risky levels at 12,481, 13,774 and 13,890. Tested and held its 50-day
simple moving average at 12,180 on Thursday.
S&P 500 – (11314.5) My weekly value level is 1308.6 with a daily pivot at 1314.2
and the February 18th high at 1344.07, and monthly risky level at 1360.0. My
quarterly value level is 1277.7.

NASDAQ – (2760) My weekly value level is 2713 with a daily pivot at 2759 and
the February 18th high at 2840.51, and monthly risky level at 2898.

NASDAQ 100 – (2311) Daily and weekly value levels are 2302 and 2270 with the
50-day simple moving average at 2323, the February 16th high at 2403.52, and
monthly, annual and quarterly risky levels at 2477, 2590 and 2685.

Dow Utilities – (411.88) My semiannual value level is 397.84 with daily and weekly
pivots at 409.30 and 410.11, and monthly and quarterly risky levels at 423.25 and
448.17.

Dow Transports – (5250) Daily, annual and weekly value levels are 5160, 5179
and 5128 with my monthly risky level at 5371. The high for the move is 5404.33
set on Friday, April 1st.

Russell 2000 – (827.47) Annual and quarterly value levels are 784.16 and 778.81
with daily and weekly pivots at 824.60 and 829.37, and monthly risky level at
856.67. Set a new high for the move at 859.08 on April 6th.

The SOX – (428.41) My weekly pivot is 425.56 with the 50-day simple moving
average at 443.88, and daily, monthly and quarterly risky levels at 441.65, 452.34
and 498.75.
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Our Chief Market Strategist Richard Suttmeier is a prolific market observer and
you can find his content in a variety of places. His weekly column on Forbes provides
insights into his "Buy and Trade" strategy while his daily market analysis can be
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In most cases, you can receive notification of VE content posting by Suttmeier
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