John L. Grove College of Business Investment Management … · 2017. 9. 14. · In this report, you...

webspace.ship.edu/imp

John L. Grove College of Business

Investment Management Program

2011 Annual Report

Mission StatementThe investment management program is aimed at

providing students with the skills, theory, and concepts, needed to become portfolio managers through a proactive

educational environment. The intent of the Investment Management Program (IMP) is to provide academic

scholarships for fi nance program in the future.

Table of Contents

Letter to Friends and Affi liates ....................................................................................... 1

Introduction .................................................................................................................... 2

Shippensburg University IMP Funds .............................................................................. 3

Investment Objective ............................................................................................... 3

Investment Strategy ................................................................................................ 3

Sector Allocation ..................................................................................................... 3

Portfolio Performance ............................................................................................... 3

Investment Philosophy and Process ............................................................................... 4

Investment Considerations ...................................................................................... 4

Valuation Analysis ................................................................................................... 4

Portfolio Monitoring ................................................................................................. 4

Risk Controls ............................................................................................................ 4

Sector Allocations .......................................................................................................... 5

Fund Performance .......................................................................................................... 6

Top 5 Performing Stocks in 2011 ............................................................................. 6

Top 10 Holdings as of December 31, 2011 .............................................................. 6

Bottom 5 Performing Stocks in 2011 ....................................................................... 6

Investment Criteria .................................................................................................. 7

2011 IMP Annual Performance ................................................................................ 7

Portfolio Holdings ......................................................................................................8-39

Investment Management Program Portfolio ................................................................. 40

Investment Management Program 1

April 14, 2012

Dear Stakeholder,

The spring 2012 IMP class is excited to present to you our 2011 portfolio performance, and spring 2012 update. The Investment Management Program here at Shippensburg University has given us the unique opportunity to practice and apply analytical and investing skills that we have learned in various fi nance courses to manage a real-dollar portfolio for the SU Foundation. We are grateful for this opportunity, and we realize how important it is for us to take advantage of our time and resources within the IMP class. Therefore, we have spent a great deal of time in analyzing and evaluating our portfolio holdings in our mission to achieve the highest return possible.

We would like to take this opportunity to thank the SU Foundation, our corporate and individual investors. Among other, we appreciate Mr. Frank Wisman, who made the original contribution to initiate the IMP fund, without whom this program would not be possible. We would also like to thank the Provost, Dr. Barbara Lyman, College of Business deans, and Finance Advisory Council members for their continued support and assistance in funding our trip to the annual RISE Forum held at the University of Dayton (Ohio), where we presented the IMP portfolio performance.

In this report, you will fi nd the IMP investment objective, philosophy, security selection criteria, and current holdings along with a performance summary for 2011.

Any comments or suggestions that you may have are always welcome and appreciated ([email protected]).

Sincerely,

The Spring 2012 IMP Portfolio Managers

Letter to Friends and Affi liates

John L. Grove College of Business

Shippensburg University1871 Old Main DriveShippensburg, PA 17257-2299

www.ship.edu/business

Offi ce: 717-477-1435Fax: 717-477-4003

[email protected]

A member of the Pennsylvania State System of Higher Education

2 Investment Management Program

During the 2011-2012, semesters the Investment Management Program (IMP) has provided us with the unique opportunity to learn more about investing fi rsthand and put our collective knowl-edge to the test. We have had the privilege to act as managers for the IMP portfolio as we saw fi t. It has been a trying year as the economy managed weak growth with the S&P 500 returning only the dividend. The changes we have made to our strategy should provide superior returns for classes that inherit the portfolio. This has been an invaluable experience and we will carry on the knowl-edge that we have acquired as members of the IMP with us into our professional careers.

During the fi rst offi cial meeting of the IMP class every semester, all students are split among four sub-groups: Accounting, Ad-ministrative, Redefi ning Investment Strategy Education (RISE) taskforce, and Public Relations. Each sub-group is responsible for specifi c tasks to keep the program’s daily operations running. The accounting group is responsible for recording all transactions of the portfolio and the information for the fund. The administrative group handles the preparation of the annual report as well as details for the annual dinner. It is the responsibility of Public Relations to update the IMP display case in the John L. Grove College of Business building, help the SU Foundation in fundraising for the portfolio and other activities, advertise IMP for potential future members, and maintain relationships with the donors. The RISE group is in charge of preparing for the portfolio management competition at the RISE symposium at University of Dayton (Ohio) each year.

The RISE symposium is an annual competition arena during which our portfolio performance is evaluated and ranked along with other schools with similar programs and investing styles. During the 2012 trip to RISE our class had the privilege to be one of few selected chapters to present our portfolio and investment strategy in front of a panel during the forum. We learned a lot from the experts at the panel discussions and breakout sessions and received high praise from the professionals we presented to. It was an experience that defi ned the year for us.

Each student within the class acts as a fund manager, but is re-sponsible for daily monitoring assigned individual stocks based on the ten GICS sectors. All students are required to stay on top of fi nancial news and trends and to present possible investment op-portunities to the class. Students are also required to present these stocks in a presentation form (Stock Worksheet, developed in Fall 2010 class), and a criteria worksheet (developed in Fall 2011 class) when new opportunities arise or to reevaluate our position in the securities. As a class, we are also responsible for coming up with and maintaining a timeline in order to meet all deadlines and be prepared for various events throughout the year.

In 2011-2012 the Finance Advisory Council continued their dedication to this program. With their guidance and insight, IMP has evolved into a productive and valuable program. For further information on this program including the IMP Handbook, visit the IMP website at: http://webspace.ship.edu/imp.

Introduction

IMP students at RISE 2012 (L to R): Nicholas Pedersen, Katelyn Howard, Jennifer Spinka, Amanda Fitzpatrick, Dr. Hong Rim, Troy Oberholtzer, Jared Hammers, and Matthew Diehl.


Investment Objective ➤ To achieve a risk-adjusted return higher than the benchmark, the S&P 500 index.

Investment Strategy ➤ To attain a balanced fund by investing in growth, blend and value securities, while remaining risk averse based on our opinion of the direction of the macro economy.

Sector Allocation ➤ Our sector allocation is based on the 10 S&P/MSCI Global

➤ Industry Classifi cation Standard (GICS) sectors. We may invest more in sectors that we expect to outperform others.

➤ To control risk, no more than 1/4 of the portfolio may be invested in one sector.

➤ 32 equity securities in 10 sectors.

➤ As of December 31, 2011: $75,238.99 (95.5%) in equity securities and $3,525.01 (4.5%) in the money market account.

Shippensburg University IMP Fund

PORTFOLIO CHARACTERISTICS IMP S&P 500 ASSET ALLOCATION

Price/Earnings (P/E) 13.91 13.90 Large Cap 73.93%

Price/Book (P/B) 3.06 2.10 Mid Cap 17.24%

Dividend Yield (%) 2.28 2.40 Small Cap 4.35%

ROE (%) 30.64 22.84 Money Market 4.50%

Beta 1.02 1.00

Portfolio Performance ➤ The return of the IMP portfolio in 2011 is -4.9%, compared to 2.11% of its benchmark, S&P 500 index.

Spring 2012 IMP Portfolio Managers (L to R): Top: Alex Andrussier, Jared Hammers, Andrew Kiely, Troy Oberholtzer, and Nicholas Pedersen. Bottom: Matthew Diehl, Jennifer Spinka, Katelyn Howard, Amanda Fitzpatrick, and Marcus Lucchese


Investment Philosophy and ProcessThe investment objective of the IMP is to obtain long-term capital appreciation in excess of our benchmarks. To achieve excess returns, we focus on investing in undervalued stocks of companies that have sound business and fi nancial fundamentals, in relation to the S&P 500 and the industry.

The IMP portfolio management team uses a bottom up approach to identify valuable investment opportunities. We focus on undervalued stocks of multiple market capitalizations through a blend approach of growth and value stocks.

Investment ConsiderationsWe consider investing in undervalued stocks of good companies that have sound business and fi nancial fundamentals. Our investment considerations include the following:

Qualitative analysis suggests that the company has the following desirable factors:

- Identifi able business strategy with a recognizable business model

- Strong competitive standing

- Insider holding

- Ability to weather economic downturns

- Institutional holding

- Recent news that could affect the well-being of a com-pany such as recent run-ins with the law (SEC fi lings), new products or services being released, old products or services being eliminated, or recent and upcoming mergers or acquisitions.

- Other miscellaneous factors: spending on research and development

Valuation AnalysisWe consider buying stocks that are undervalued. Undervaluation means that our intrinsic value estimate of a stock is signifi cantly higher than the market price. We use the following valuation meth-ods and resources to estimate intrinsic value of a stock.

1. For input parameters of the models (e.g., future EPS growth rate), we rely on fi nancial analyst estimates from various websites such as Yahoo!Finance, Zack’s, and Morningstar. If estimates from various websites are disperse, analysts may use the most conservative one to give us more margin of safety.

2. To determine whether or not a stock is undervalued, we also look at intrinsic value estimates from other sources (e.g., stock reports from Standard & Poor’s and Morningstar).

3. Other ratios to be used in determining whether a stock is undervalued are as follow: P/E, PEG, P/B, P/S, and Divi-dend Yield

Portfolio MonitoringWe monitor our portfolio’s holdings on a constant basis. Each class member is assigned with 1 to 3 stocks to follow. A detailed reevaluation is needed if the following signals incur:

1. Fundamentals of the company are deteriorating. The fun-damentals of a company include, but not limited to, the following: competitive position within an industry, product innovation, operating effi ciency, pricing (leader or fopment, expanding markets, recent corporate actions, global growth, and demand for existing goods, and a company’s competi-tive advantages.

2. Company Fundamentals: We examine a fi rm’s key fi nancial ratios over the past several years, and compare them to the fi rm’s competitors to determine if a company has sound fi nancial fundamentals. The fi nancial performance analysis is based on, but not limited to, the following fi nancial ratios:

- Solvency and Financial Leverage Ratios: Current Ratio, and Debt Ratio

- Effi ciency Ratios: Total Asset Turnover, and Inventory Turnover

- Profi tability Ratios: Net Profi t Margin, Return on Asset (ROA), and Return on Equity (ROE).

- Growth Rates (5-year average): Historical Revenue Growth, Historical EPS Growth, and Projected EPS Growth any patents, the quality of management, M&A, mission statement, public relations, and fi ling of quarterly and annual reports.

3. Better investment alternative is found.

4. Signifi cant decline in EPS quarter to quarter.

5. Stock prices gain or lose 15% over time from initial purchase price.

6. Reasons for purchase no longer exist.

7. Stock becomes overvalued.

8. Changing conditions within our economy as well as the stock market.

Risk ControlsIn order to control portfolio risk, the following rules are imposed:

➤ No more than 10% of the portfolio may be initially invested in one particular stock.

➤ No more than 1/3 of the portfolio may be invested in one sector.


Sector AllocationsAs of December 2011, the IMP portfolio comprises of investments in all of the 10 S&P/MSCI GICS sectors. To achieve better perfor-mance than our benchmark, we over-weight and under-weight sectors in comparison to the S&P 500 index. The table (above) shows the IMP’s sector weights as compared to those of the S&P 500. The sector weights have been continuously re-evaluated in spring 2011 in an effort to outperform the benchmark. Mean-while, to construct a diversifi ed portfolio, we set a minimum standard of investing in at least seven sectors. This allows us to better control risk while providing us the leeway needed to outperform the benchmark.

SECTOR IMP S&P 500 SECTOR WEIGHT GOALS

Industrials 13.40% 10.59% Move to Market Weight

Healthcare 10.40% 11.63% Stay Market Weight

Consumer Discretionary 11.00% 10.69% Stay Market Weight

Information Technology 21.10% 18.81% Move to Market Weight

Telecommunication Services 5.20% 2.84% Stay Over Weight

Consumer Staples 8.40% 11.22% Stay Under Weight

Basic Materials 8.10% 3.44% Stay Over Weight

Utilities 2.30% 3.52% Stay Market Weight

Energy 10.60% 10.82% Stay Market Weight

Financial Services 5.50% 16.44% Move to Market Weight


Fund PerformanceTop 5 Performing Stocks in 2011The IMP’s return was -4.9% for 2011. The following table displays the top fi ve highest returns for 2011. Apollo Group Inc. leads the way with the highest return for 2011, yielding a 36.40% return. Discover Financial Services comes in second generating a 30.20% return. Apple Inc., Yum Brands, and Abbott Laboratories all yielded strong returns; 25.60%, 20.30%, and 17.40%, respectively.

TOP 5 PERFORMING STOCKS IN 2011

STOCK TICKER SYMBOL RATE OF RETURN

Apollo Group Inc. APOL 36.40%

Discover Financial Services DFS 30.20%

Apple Inc. APPL 25.60%

YUM Brands YUM 20.30%

Abbott Laboratories ABT 17.40%

Top 10 Holdings as of December 31, 2011 The ten largest holdings represent 42.70% of the total portfolio. The top holdings consist of Apple, Snap-On Inc, Danaher Corp., Novartis AG, Intel Corp, Yum Brands, Verizon Wireless Comm., Coca-Cola Co., Bio-Reference Laboratories, and Abbott Labora-tories. For example, Apple with a 6.2% weight is the largest holding of the IMP portfolio. The other top holdings are Snap-On Inc. (5.70%), Danaher (4.80%), Novartis (4.70%), and Intel Corpora-tion (4.30%).

TOP 10 HOLDINGS AS OF DECEMBER 31, 2011

STOCKTICKER

SYMBOLHOLDING RETURN

INVESTMENT WEIGHT

Apple Inc. AAPL 128.97% 6.20%

Yum Brands YUM 102.99% 4.00%

Danaher Corp. DHR 85.11% 4.80%

Coca-Cola Co. KO 60.61% 3.10%

Verizon Wireless Comm. VZ 34.63% 3.90%

Abbott Laboratories ABT 20.07% 2.90%

Snap-on Inc. SNA 19.65% 5.70%

Bio-Reference Laboratories BRLI 18.67% 3.10%

Intel Corporation INTC 13.48% 4.30%

Novartis AG ADR NVS 8.19% 4.70%

Bottom 5 Performing Stocks in 2011 The IMP portfolio had some underperforming stocks as well. As shown in the table below, the following companies that under-performed during 2011 were BYD, A123 System Inc., Yongye International, Hewlett Packard and Ebix Inc. For example, BYD yielded the worst return for the portfolio with a -78.50% return. The second biggest loss is A123 System Inc, yielding a -55.80% return. Yongye International, Hewlett Packard, and Ebix Inc.produced returns of -54.10%,-45.80%, and –36.80%, respectively.

BOTTOM 5 PERFORMING STOCKS IN 2011

STOCKTICKER

SYMBOLRATE OF RETURN

BYD Co. Ltd.* BYDDF -78.50%

A123 System Inc.* AONE -55.80%

Yongye International YONG -54.10%

Hewlett Packard* HP -45.80%

Ebix Inc.* EBIX -36.80%

*Losses realized in 2011


Fund PerformanceInvestment CriteriaAs a team, we consider investing in undervalued stocks of com-panies that have sound business and fi nancial fundamentals. Our investment considerations include the following:

➤ Qualitative analysis suggests that the company has a sound business strategy.

➤ We conduct a SWOT analysis to explain a company’s internal strengths and weakness and their external opportunities and threats.

➤ Company Fundamentals

- We examine a fi rm’s key fi nancial ratios over the past several years, and compare them to the industry and competitors to determine if a company has sound fi nan-cial fundamentals. The fi nancial performance analysis is based on, but not limited to, the following fi nancial ratios:

➤ Solvency and Financial Leverage Ratios

- Current Ratio > 1.

- Debt Ratio < Industry Average

➤ Effi ciency Ratios

- Total Asset Turnover > Industry Average

- Inventory Turnover > Industry Average

➤ Profi tability Ratios

- Net Profi t Margin > Industry Average

- Return on Asset (ROA) > Industry Average

- Return on Equity (ROE) > Industry Average

➤ Growth Ratio (5 year)

- Historical EPS Growth > Industry Average

- Historical Revenue Growth > Industry Average

- Projected EPS Growth > Industry Average

➤ Ratios compared to the industry average are also analyzed for positive trends from quarter to quarter.

➤ The company must meet at least 6 out of the 10 criteria with at least one from each category.

NOTE: All of these ratios are calculated on the Security Analysis Work-sheet, which is our main tool used to decide if a company can be part of our portfolio.


PORTFOLIO HOLDINGS 2011

HOLD: Abbott Laboratories (NYSE:ABT)ANALYST: Jared Hammers 9/15/2011SECTOR: Healthcare STOCK TYPE: Large ValueMKT CAP: $96.8B HOLDING RETURN (2011): 20.07%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $45.16-$56.33CURRENT PRICE: $56.23 FAIR VALUE: $70.00

Key Statistics 2007 2008 2009 2010 2011 Ind. (2011)

Total Return % 17.88 -2.45 4.08 -8.08 21.29 15.54

ROA% 2.23 2.43 2.29 2.66 2.47 4.93

ROE% 22.66 27.69 28.49 20.45 20.20 9

Net Margin % 13.92 16.53 18.68 13.16 12.17 6.87

Asset Turnover .68 .72 .65 .63 .65 0.4

Financial Leverage

2.23 2.43 2.29 2.66 2.47 N/A

Operating Margin %

17.7 19.3 20.3 17.3 14.8 11.51

Revenue Growth %

15.3 13.94 4.19 14.31 10.48 9.07

EPS Growth % 106.25 35.06 18.27 -19.78 1.69 NA

Current Ratio 1.54 1.47 1.79 1.29 1.54 2.12

Valuation Analysis

22007 2008 2009 2010 2011

P/E 24.3 17.6 14.6 16.2 18.7

P/B 4.9 4.7 3.7 3.3 3.6

P/S 3.4 2.8 2.7 2.1 2.3

P/FCF 16.9 11.3 11.5 8.5 9.8

Dividend Yield 2.26 2.63 2.89 3.59 3.44

Business Summary: Abbott manufactures and markets pharmaceuticals, medical devices, blood glucose monitoring kits, and nutritional health-care products. Products include prescription drugs, coronary and carotid stents, and nutritional liquids for infants and adults. Following the Advanced Medical Optics acquisition, Abbott also markets eye-care products. Abbott generates slightly less than 60% of revenue from pharmaceu-ticals.

Investment Rationale/Risk: ➤The compa ny’s diverse operations are well positioned in emerging markets which should allow the company to create double digit revenue growth. The company’s strong fi nancial fundamentals and top management should allow for a great holding return.

➤Abbott also made an announcement revealing their plans to split into two separately traded companies. The fi rst unit will be a medical devices company, while the other entity will focus on pharmaceuticals. The medical device unit expects to take advantage of emerging markets and grow at a faster rate than the pharmaceuticals company. Also, both of these companies will continue to pay dividends. We continue to monitor the effects of this strategic decision.

Earnings Estimates COMPANY INDUSTRY

Current Year 7.6 1.1

Next Year 6.9 5.0

Past 5 Years 12.1 11.3

Next 5 Years 7.5 5.5

Peers Return (2011)% ROE %

Johnson & Johnson 9.67 17.02

Pfi zer 28.16 11.78

Merck 8.93 11.49



HOLD: Apollo Group Inc. (Nasdaq: APOL)ANALYST: Andrew Kiely 2/21/12SECTOR: Consumer Discretionary STOCK TYPE: Mid ValueMKT CAP: $5.3B HOLDING RETURN (2011): -25.88%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $37.08 - $58.29CURRENT PRICE: $53.87 FAIR VALUE: $59.00


Total Return % 80.01 9.22 -20.93 -34.81 36.41 -10.22

ROA% 29.92 28.79 23.35 16.11 16.66 3.77

ROE% 66.03 64.92 60.08 44.00 44.09 7.71

Net Margin % 15.01 15.17 15.06 11.23 12.09 8.55

Asset Turnover 1.99 1.90 1.55 1.44 1.38 0.79

Financial Leverage

2.29 2.23 2.82 2.66 2.64 N/A

Operating Margin %

22.97 23.86 26.16 20.52 20.31 13.38

Revenue Growth %

9.94 15.31 25.87 24.59 -3.91 3.35

EPS Growth % - 22.13 30.66 -3.47 11.60 -26.4

Current Ratio 1.24 1.35 1.07 1.26 1.43 1.16

Valuation Analysis

22007 2008 2009 2010 2011

P/E 27.8 24.3 14.6 10.5 13.4

P/B 13.6 11.8 6.5 3.9 5.5

P/S 4.3 3.8 2.2 1.2 1.6

P/FCF 18.8 13.9 9.7 5.6 8.5

Dividend Yield - - - - -

Business Summary: Apollo Group is one of the world’s largest for-profi t education companies, with 350,000 degreed students enrolled in its core school, the University of Phoenix. The company offers classes online and through physical learning centers in nearly 40 states as well as various international loca-tions. Programs range from associate to doctor-ate degrees in areas such as business, education, health care, technology, and social and behavioral sciences.

Investment Rationale/Risk: ➤One of the largest private education providers.

➤Broad portfolio of education programs and related services.

➤Strong fi nancial performance and global reach.

➤Placed on sell list at $58.

➤Positive outlook for non-traditional postsecondary education market. Growth of online learning in U.S. education.

➤Apollo acquired Carnegie Learning and now gets their technology, as well as Cognitive Tutor math software.


Current Year -34.3 N/A

Next Year -34.6 -17.4




Corinthian Colleges Inc. -58.35 -17.70

DeVry Inc. -19.28 25.72

Education Management Corporation

54.64 10.98



HOLD: Apple Inc. (Nasdaq: AAPL)ANALYST: Matthew Diehl 10/06/11SECTOR: Technology STOCK TYPE: Large GrowthMKT CAP: $552.7B HOLDING RETURN (2011) 128.97%MORNINGSTAR RATING: *** 52 WEEK RANGE (2011): $315.32-$422.24CURRENT PRICE: $405.00 FAIR VALUE: $560.00


Total Return % 133.34 -56.91 146.90 53.07 25.56 14.84

ROA% 16.43 14.89 18.92 22.84 27.07 7.39

ROE% 28.52 27.19 31.27 35.28 41.67 13.79

Net Margin % 14.56 14.88 19.19 21.48 23.95 6.69

Asset Turnover 1.13 1.00 0.99 1.06 1.13 1.45

Financial Leverage

1.74 1.88 1.50 1.57 1.52 N/A

Operating Margin %

18.4 19.3 27.4 28.2 31.2 8.76

Revenue Growth %

24.29 56.17 14.44 52.02 65.96 22.75

EPS Growth % 73.13 36.39 69.40 66.85 82.17 N/A

Current Ratio 2.36 2.46 2.74 2.01 1.61 1.5

Valuation Analysis

22007 2008 2009 2010 2011

P/E 43.5 15.8 20.5 18.0 11.5

P/B 10.3 3.3 5.3 5.4 4.2

P/S 6.7 2.3 4.1 3.9 3.0

P/FCF 27.5 7.2 16.0 13.2 8.4

Dividend Yield N/A N/A N/A N/A N/A

Business Summary: Apple designs consumer electronic devices, in-cluding PCs (Mac), tablets (iPad), phones (iPhone), and portable music players (iPod). Its iTunes online store is the largest music distributor in the world; it sells and rents TV shows and movies and sells applications for the iPhone and iPad. In early 2011, Apple launched the Mac app store, an online store that sells fi rst- and third-party applications for Mac desktop and notebook computers. Apple’s products are distributed online as well as through company-owned stores and third-party retailers.

Investment Rationale/Risk: ➤Apple is a fi nancially strong company with a tremendous amount of cash on their balance sheet while also being on the cutting edge of technology and innovation.

➤Management recently stated that they will start paying a quarterly dividend while also buying back shares over the next couple of years.

➤Steve Jobs was a terrifi c leader and an amazing inventor and his passing does concern us but we feel the new CEO Tim Cook as well as other management will step up and continue to grow this company in the future


Last Qtr. 57.9 28.6

Last Year 13.4 9.7




International Business Machines

27.27 73.43

Hewlett-Packard -37.77 17.89

Dell 7.97 41.86



BUY: Bio-Reference Laboratories (Nasdaq:BRLI)ANALYST: Jared Hammers 9/15/2011SECTOR: Healthcare STOCK TYPE: Small GrowthMKT CAP: $625.4M HOLDING RETURN (2011) 18.67%MORNINGSTAR RATING: N/A 52 WEEK RANGE (2011): $12.03-$25.24CURRENT PRICE: $16.27 FAIR VALUE: N/A


Total Return % 45.31 -19.74 49.14 13.39 -26.65 -1.1

ROA% 10.15 9.57 11.83 11.95 13.79 2.47

ROE% 18.12 16.72 19.33 19.05 21.25 5.91

Net Margin % 5.57 5.19 6.03 5.76 6.51 4.94

Asset Turnover 1.82 1.84 1.96 2.07 2.12 0.45

Financial Leverage

1.81 1.69 1.59 1.60 1.49 N/A

Operating Margin %

10.01 9.49 10.57 10.56 10.70 9.65

Revenue Growth %

29.67 20.22 20.45 26.30 21.97 22.07

EPS Growth % 18.82 10.89 40.18 19.75 37.23 N/A

Current Ratio 1.82 1.96 2.18 2.07 2.51 2.12

Valuation Analysis

22007 2008 2009 2010 2011

P/E 32.4 23.4 24.9 23.6 13.2

P/B 5.2 3.6 4.3 4.1 2.5

P/S 1.8 1.2 1.5 1.4 .9

P/FCF 76.3 19.4 22.4 46.3 21.3

Dividend Yield NA NA NA NA NA

Business Summary: Bio-Reference Laboratories is a regional clinical laboratory with focused market testing abilities. Through its New Jersey facility, the company performs chemical-diagnostic tests, including blood and urine analysis, hematology services, serology, toxicology, pap smears, and biopsied-tissue examinations.

Investment Rationale/Risk: ➤Bio-Reference Laboratories is one of the most volatile stocks in the IMP Portfolio.

➤Signifi cant room to grow and we believe the future is promising for this fi rm.

➤The negative performance in 2011 can be heavily attributed to a sell-off, which was the result of report that indicated BRLI’s accounting practices were not sound. This report has not been confi rmed as credible, but it was the catalyst for a 60% drop in BRLI’s price in November as investor’s began to panic and “jump ship”. BRLI’s price then proceeded to rise 35% in December as investor’s began to believe that BRLI was oversold.

➤We believe that BRLI will fully recover from any negative publicity received at the end of 2011.

➤BRLI has a strong history of outperforming earnings estimates. We have confi dence in BRLI, but we may look for a selling opportunity if BRLI fully rebounds to capture gains while reducing volatility in the IMP Portfolio.



Next Year 17.8 16.7




Company 1 8.32 12.18

Company 2 -11.07 9.66

Company 3 -8.32 17.9



BUY: Peabody Energy Corporation (NYSE:BTU)ANALYST: Troy Oberholtzer 12/6/2011SECTOR: Energy STOCK TYPE: Mid-CoreMKT CAP: $8.33B HOLDING RETURN (2011): -14.02%MORNINGSTAR RATING: ***** 52 WEEK RANGE(2011): $31.11-$72.71CURRENT PRICE: $33.11 FAIR VALUE: $53.00


Total Return % 63.53 -62.70 99.82 42.17 -47.72 -37.62

ROA 2.76 9.78 4.53 7.26 6.82 0.12

ROE 10.88 35.16 13.47 18.41 18.88 0.31

Net Margin % 5.78 14.46 7.45 11.28 12.01 22.21

Asset Turnover 0.48 0.68 0.61 0.64 0.57 0.02

Financial Leverage

3.84 3.38 2.66 2.44 3.05 N/A

Operating Margin %

12.43 21.13 14.05 19.33 19.98 31.81

Revenue Growth %

11.35 43.42 -8.36 12.10 18.32 0.25

EPS Growth % -56.05 258.16 -52.71 71.69 23.51 N/A

Current Ratio 0.88 1.06 1.67 1.95 1.65 0.03

Valuation Analysis

22007 2008 2009 2010 2011

P/E 39.5 6.3 27.5 22.4 8.8

P/B 6.5 1.9 3.2 3.7 1.6

P/S 3.6 0.9 2.0 2.5 1.1

P/FCF 52.4 4.8 11.5 15.9 5.5

Dividend Yield 0.37 1.05 0.55 0.46 1.03

Business Summary: Peabody Energy Corporation (Peabody) is a coal company. As of December 31, 2011, the Company owned interests in 30 coal mining operations, including an interest in 29 coal operations located in the United States and Australia. In addition to its mining operations, the Company markets, brokers and trades coal through its Trading and Brokerage segment.

Investment Rationale/Risk: ➤ International diversifi cation.

➤Extracts low-sulfur coal which exceeds environmental regulations.

➤Diversifi cation in Australia and Mongolia allows Peabody to take advantage of emerging markets and reduce risk.

➤Risk that the price of coal will drop.



Next Year -22.8 14.2




Consol Energy -23.83 12.4

Arch Coal -57.39 14.5

Walter Energy -52.24 10.3



HOLD: China Mobile Limited (NYSE:CHL)ANALYST: Nicholas Pedersen 11/10/2011SECTOR: Communication Services STOCK TYPE: Large ValueMKT CAP: $216.9B HOLDING RETURN (2011): -4.73%MORNINGSTAR RATING: *** 52 WEEK RANGE(2011): $43.77 - $51.70CURRENT PRICE: $48.49 FAIR VALUE: $56.00


Total Return % 103.59 (39.61 (5.55) 10.45 1.42 -2.01

ROA% 16.46 18.47 16.35 14.83 14.07 5.14

ROE% 25.15 27.65 24.27 22.10 21.46 8.96

Net Margin % 24.39 27.35 25.47 24.66 24.39 9.07

Asset Turnover .68 .68 .64 .60 .58 .55

Financial Leverage

1.51 1.49 1.48 1.50 1.52 N/A

Operating Margin %

34.76 34.59 32.52 31.07 30.14 15.93

Revenue Growth %

20.97 15.37 9.78 7.33 17.91 9.19

EPS Growth % 30.09 29.44 2.35 3.88 - -

Current Ratio 1.34 1.33 1.37 1.26 1.30 1.42

Valuation Analysis

22007 2008 2009 2010 2011

P/E 29.7 12.5 11.2 11.1 10.1

P/B 6.8 3.2 2.5 2.3 2.0

P/S 7.2 3.4 2.8 2.7 2.5

P/FCF 15.3 7.3 6.2 5.7 5.4

Dividend Yield 1.29 3.18 3.44 3.35 3.79


Current Year 6.9 (2.6)

Next Year .9 7.1




China Telecom Corp (CHA)

11.15 7.17

China Unicom, Ltd (CHU)

49.06 1.87

Vodafone Group, PLC (VOD)

13.78 8.96

Business Summary: China Mobile provides wireless voice and value-added services through GSM networks covering mainland China and a substantial part of Hong Kong. In January 2009, it also started offering 3G services based on the TD-SCDMA standard. China Mobile ranks as the largest mobile carrier in the world with over 600 million subscribers. The com-pany acquired a 20% stake in Shanghai Pudong Development Bank in 2010 and a 19.9% stake in Phoenix Satellite Television in 2006.

Investment Rationale/Risk: ➤Ranked as the largest mobile carrier in the world with over 600 million customers.

➤Compared to its peers, it has the largest market share of China.

➤Strong balance sheet.

➤Pays a 3.40% dividend.

➤Fulfi lls the majority of our stock criteria.



BUY: Coach Inc. (NYSE:COH)ANALYST: Jennifer Spinka 11/08/11SECTOR: Conusmer Discretionary STOCK TYPE: Large GrowthMKT CAP: $21.8B HOLDING RETURN (2011): -6.0%MORNINGSTAR RATING: ** 52 WEEK RANGE (2011): $45.96- 67.62CURRENT PRICE: $61.04 FAIR VALUE: $60.00


Total Return % -28.82 -32.08 76.96 52.85 11.85 11.49

ROA% 32.56 33.16 25.77 29.21 34.53 10.12

ROE% 42.83 45.71 38.82 45.91 56.50 16.65

Net Margin % 25.40 24.62 19.30 20.37 21.18

Asset Turnover 1.28 1.35 1.34 1.43 1.63 1.26

Financial Leverage

1.28 1.50 1.51 1.64 1.63 22.63

Operating Margin %

38.0 36.1 30.1 31.9 31.4 10.24

Revenue Growth %

28.37 21.75 1.56 11.68 15.27 10.84

EPS Growth % 38.58 23.30 -11.98 21.99 25.32 39.75

Current Ratio 4.27 3.07 3.04 2.46 2.45 1.98

Valuation Analysis

22007 2008 2009 2010 2011

P/E 16.1 9.5 18.3 20.1 19.1

P/B 7.1 4.6 6.2 9.4 9.5

P/S 3.9 2.2 3.5 4.3 4.1

P/FCF 13.2 9.5 10.9 17.5 14.3

Dividend Yield - - 0.62 0.95 1.35



NextYear 16.8 18.8




Moet Hennessy Louis Vuitton SA

-13.83 17.47

Hermès International 42.58 24.69

Compagnie Financiere Richemont SA

-15.01 16.51

Business Summary: Coach is a manufacturer, distributor, and retailer focused on handbags and leather accessories in an assortment of styles. Its products offer the quality of higher luxury brands but at more attractive price points. Although around 60% of sales come from its more than 345 North American retail stores and more than 120 outlet stores, Coach also sells its products through department stores, international shops, the Internet, its catalog, and Coach Stores in Japan and China.

Investment Rationale/Risk: ➤We made the decision to buy Coach Stock because we were looking for a strong company to invest in over the holiday season that we believed would bring in revenue.

➤We saw Coach as a great choice because they cater their product lines to both the high end buyer, and the middle class.

➤We saw Coach as a long-term stable company, having been around for over 70 years.

➤Their main strengths are having little debt, continuing to expand into new markets and increasing their dividends over the past 3 years.



HOLD: Cisco Systems Inc. (NYSE:CSCO)ANALYST: Nicholas Pedersen 11/22/2011SECTOR: Technology STOCK TYPE: Large CoreMKT CAP: $112.6B HOLDING RETURN (2011): -4.82MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $13.73 - $22.05CURRENT PRICE: $18.08 FAIR VALUE: $26.00


Total Return % (0.95) (39.79) 46.87 (15.50) (9.74) -17.52

ROA% 15.17 14.37 9.67 10.41 7.72 3.09

ROE% 26.48 24.46 16.81 18.74 14.19 3.55

Net Margin % 21.00 20.36 16.98 19.40 15.02 -3.22

Asset Turnover .72 .71 .57 .54 .51 .74

Financial Leverage

1.69 1.71 1.76 1.83 1.84 N/A

Operating Margin %

24.69 23.88 20.27 22.89 17.76 -1.25

Revenue Growth %

22.60 13.22 (8.66) 10.86 7.94 5.92

EPS Growth % 31.46 11.97 (19.85) 26.67 (12.03) -

Current Ratio 2.36 2.58 3.24 2.67 3.27 2.15

Valuation Analysis

22007 2008 2009 2010 2011

P/E 21.5 12.3 24.4 14.8 15.7

P/B 4.8 2.7 3.4 2.5 2.1

P/S 4.7 2.5 4.0 2.8 2.3

P/FCF 15.6 8.4 16.1 11.3 9.3

Dividend Yield - - - - 1.00



Next Year 8.1 26.6

Past 5 Years 5.5 (.9)



Alcatel-Lucent (ALU) (47.30) 29.60

Hewlett-Packard (HPQ)

(37.77) 17.89

JNPR (44.72) 6.21

Business Summary: Cisco Systems is the world’s leading supplier of data networking equipment and software. Its products include routers, switches, access equip-ment, and network-management software that allow data communication among dispersed computer networks. The fi rm has also entered newer markets, such as video conferencing, web-based collabora-tion, and data center servers.

Investment Rationale/Risk: ➤Leading supplier of data networking equipment and software.

➤Consistently surpass predicted earnings estimates.

➤Recently began paying dividends.




BUY: Discover Financial Services (NYSE:DFS)ANALYST: Alex Andrussier 9/27/11SECTOR: Financial Services STOCK TYPE: Larger ValueMKT CAP: $17.5B HOLDING RETURN (2011): -4.0%MORNINGSTAR RATING: *** 52 WEEK RANGE (2011): $18.62-$27.52CURRENT PRICE: $24.00 FAIR VALUE: $34.00


Total Return % - -35.21 55.19 26.51 31.03 32.57

ROA% 1.77 2.40 2.85 1.25 3.40 .39

ROE% 10.35 16.11 18.54 9.73 29.96 7.62

Net Margin % 11.65 19.31 18.16 10.03 31.16 12.75

Asset Turnover 0.15 0.12 0.16 0.12 0.11 .08

Financial Leverage

6.68 6.74 6.32 9.41 8.35 N/A

Operating Margin %

- - 31.49 19.06 49.69 21.18

Revenue Growth %

-6.32 19.65 18.79 -1.13 6.12 29.00

EPS Growth % 192.86 56.10 24.48 -48.95 232.79 -

Current Ratio - - - - - .96

Valuation Analysis

22007 2008 2009 2010 2011

P/E 12.3 4.3 6.2 15.2 6.3

P/B 1.3 0.8 1.1 1.6 1.6

P/S 1.4 1.0 1.1 1.5 1.9

P/FCF 3.5 1.0 2.1 2.6 3.3

Dividend Yield 0.80 2.52 0.54 0.43 1.17


Current Year -16.5 -

Next Year 230.6 16.1




Visa, Inc. (V) 17.91 14.4

American Exp (AXP) 23.77 28.2

MasterCard (MA) 16.42 34.4

Business Summary: Discover Financial Services operates one of the two closed-loop credit card networks in the United States; American Express AXP operates the other. Discover issues proprietary cards, extends card loans to cardholders, and acquires transactions from merchants whenever a cardholder pays with a Discover card. In addition to credit cards, Discover operates a PIN-based debit card network, Pulse.

Investment Rationale/Risk: ➤Signifi cant returns of at least 25% over the past 3 years.

➤ Increasing dividend yield.

➤Better tailored student loans than its competitors.

➤Discover cards are now accepted at more cash registers worldwide.

➤Positive estimates within the next 5 years.



HOLD: Danaher Corp. (NYSE:DHR)ANALYST: Katelyn Howard 11/29/11SECTOR: Industrials STOCK TYPE: Large GrowthMKT CAP: $39.3 B HOLDING RETURN (2011): 85.11%MORNINGSTAR RATING: *** 52 WEEK RANGE (2011): $40.42-$55.77CURRENT PRICE: $47.04 FAIR VALUE: $56.00


Total Return % 21.27 -35.34 33.07 25.66 -0.08 -4.47

ROA% 9.03 7.54 6.21 8.58 8.33 6.48

ROE% 17.42 13.95 10.74 14.15 14.19 9.89

Net Margin % 12.42 10.38 10.3 13.58 13.5 10.92

Asset Turnover 0.73 0.73 0.6 0.63 0.62 0.7

Financial Leverage

1.92 1.78 1.68 1.62 1.77 N/A

Operating Margin %

15.79 14.72 13.79 16.41 16.27 16.69

Revenue Growth %

16.48 15.16 -11.91 12.2 28.21 6.95

EPS Growth % 20.4 -5.73 -12.41 52.6 17.8 N/A

Current Ratio 1.4 1.53 1.89 1.73 1.5 3.21

Valuation Analysis

22007 2008 2009 2010 2011

P/E 23.6 14.3 21.7 17.9 17

P/B 3.1 1.8 2.1 2.3 1.9

P/S 2.6 1.5 2.3 2.4 2

P/FCF 17.6 10.2 14 15.5 12.5

Dividend Yield 0.13 0.21 0.17 0.17 0.19



Next Year 11.8 11.2


Next 5 Years 15 11.7


General Electric Co. 13.01 11.15

United Technologies Corp

14.13 23.02

3M Co. 9.87 27.56

Business Summary: Danaher is a diversifi ed manufacturer, housing more than 40 industrial brands in three segments. The professional instrumentation segment produces electronic, medical, and water-test equipment. The industrial technology segment produces preci-sion motors and controls, product-identifi cation equipment, and other niche products. The tool and component division makes Sears’ Craftsman line of hand tools, Matco tools for professional mechanics, and other store-branded tools.

Investment Rationale/Risk: ➤Company’s profi tability, effi ciency, fi nancial health ratios are outstanding.

➤Good credit rating.

➤Has consistently beaten the S&P 500.

➤Diversifi ed Industrials in growth for the past 5 years and is projected to greatly outperform both in total returns for the next 15 years.



HOLD: Exelon Corporation (NYSE:EXC)ANALYST: Andrew Kiely 11/15/11SECTOR: Utilities STOCK TYPE: Large ValueMKT CAP: $25.7 B HOLDING RETURN (2011): -0.55%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $38.31-$45.45PRICE 12/30/11: $43.37 FAIR VALUE: $54.00


Total Return % 34.76 -29.40 -8.34 -10.50 9.20 12.16

ROA% 6.07 5.84 5.58 5.05 4.65 0.68

ROE% 27.21 25.84 22.86 19.56 17.86 0.32

Net Margin % 14.46 14.51 15.63 13.75 13.18 7.67

Asset Turnover 0.42 0.40 0.36 0.37 0.35 0.14

Financial Leverage

4.53 4.33 3.89 3.85 3.83 -

Operating Margin %

22.61 28.10 27.43 25.35 23.67 10.73

Revenue Growth %

20.83 -0.30 -8.17 7.66 1.50 14.37

EPS Growth % 72.34 1.98 -0.97 -5.38 -3.10 -

Current Ratio 0.84 1.32 1.28 1.51 1.10 0.50

Valuation Analysis

22007 2008 2009 2010 2011

P/E 20.2 13.6 11.9 10.8 11.6

P/B 5.3 3.3 2.6 2.0 2.0

P/S 2.9 2.0 1.9 1.5 1.5

P/FCF 12.3 5.6 5.3 5.3 5.9

Dividend Yield 2.16 3.64 4.30 5.04 4.84


Current Year -27.3 -0.5

Next Year 1.1 6.1




Ameren Corp. (AEE) 23.04 6.63

Dynegy Inc. (DYN) -50.71 -85.28

PPL Corp. (PPL) 17.10 15.71

Business Summary: Exelon is a holding company with regulated and unregulated divisions. With the recently added Con-stellation operations, its regulated utilities deliver power to 6.6 million customers at Commonwealth Edison (Illinois), PECO (Pennsylvania) and Baltimore Gas & Electric. Its generation fl eet has 34 GW of capacity in seven states and produces 240 TWh of power annually. Exelon’s 11 nuclear plants generate 80% of the fl eet’s total output.

Investment Rationale/Risk: ➤Largest nuclear plant operator in the U.S.

➤Produces low-cost electricity with minimal greenhouse gases.

➤Wide profi t margins.

➤Top management team in the utility industry.

➤Merger with Constellation Energy would allow Exelon to add a countercyclical retail business.

➤Exelon is advancing into China.

➤Pays a great dividend of 5.37%.



HOLD: Ford (NYSE:F)ANALYST: Jennifer Spinka 11/10/11SECTOR: Consumer Discretionary STOCK TYPE: Large ValueMKT CAP: $46.8B RETURN (2011): -32.62%MORNINGSTAR RATING: ***** 52 WEEK RANGE (2011): $9.37- $18.79CURRENT PRICE: $10.70 FAIR VALUE: $23.00


Total Return % -10.39 -65.97 336.68 67.90 -35.91 -27.28

ROA% -0.98 -5.90 1.32 3.65 11.78 5.98

ROE% -251.78 — — — 281.62 13.78

Net Margin % -1.58 -10.03 2.30 5.09 14.83 8.25

Asset Turnover 0.62 0.59 0.57 0.72 0.79 0.70

Financial Leverage

49.62 — — — 11.87 N/A

Operating Margin %

4.7 -2.8 -2.4 5.2 5.1 8.53

Revenue Growth %

7.74 -15.85 -19.87 10.90 5.67 4.52

EPS Growth % — — — 93.02 197.59 25.61

Current Ratio 2.32 1.33 2.96 2.67 2.64 1.31

Valuation Analysis

22007 2008 2009 2010 2011

P/E -4.8 -0.4 11.6 10.1 2.2

P/B 2.5 -0.3 -4.3 -94.3 2.7

P/S 0.1 0.0 0.3 0.5 0.3

P/FCF 0.8 -29.1 1.9 6.1 4.6

Dividend Yield - - - - -



Next Year 13.0 23.4

Past 5 Years 0.0 -6.1



Toyota Motor Corp -15.30 3.95

Honda Motor Co Ltd -21.67 12.17

General Motors Co -45.01 28.35

Business Summary: Ford Motor Company manufactures automobiles under its Ford and Lincoln brands. The company has about 17% market share in the United States and more than 8% share in Europe. Ford and Lincoln brand sales in North America and Europe made up 59% and 26% of 2011 auto revenue, respectively. The company also owns 3.5% of Mazda. Ford has about 164,000 employees and is based in Dearborn, Mich.

Investment Rationale/Risk: ➤The decision to hold Ford was based on the fi nancial soundness of the company.

➤They have had increasingly strong revenue returns, over 11%, in their North American, South American, Europe and Asia- Pacifi c markets.

➤ It is one of the top performers in the industry and was the only one who didn’t take bail-out money, so this proves the effi ciency of management in the company.



BUY: FedEx Corp. (NYSE:FDX)ANALYST: Katelyn Howard 12/9/11SECTOR: Industrials STOCK TYPE: Large CoreMKT CAP: $29B HOLDING RETURN (2011): 0.16%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $65.15-$98.50CURRENT PRICE: $83.51 FAIR VALUE: $112.00


Total Return % -17.55 -27.58 30.77 12.02 -9.67 -3.96

ROA% 8.64 4.53 0.39 4.82 5.55 3.57

ROE% 16.68 8.28 0.7 8.63 10 8.8

Net Margin % 5.73 2.96 0.28 3.41 3.69 2.19

Asset Turnover 1.51 1.53 1.42 1.41 1.5 1.17

Financial Leverage

1.9 1.76 1.78 1.8 1.8 N/A

Operating Margin %

9.3 5.47 2.1 5.75 6.05 3.22

Revenue Growth %

9.04 7.78 -6.47 -2.15 13.16 2.58

EPS Growth % 11.15 -44.44 -91.39 — 21.54 N/A

Current Ratio 1.22 1.35 1.57 1.57 1.7 1.24

Valuation Analysis

22007 2008 2009 2010 2011

P/E 13.9 19.5 -103.1 22.2 15.2

P/B 2 1.3 1.8 2 1.6

P/S 0.8 0.5 0.8 0.8 0.6

P/FCF 8 5.5 9.8 7.7 6.3

Dividend Yield 0.44 0.67 0.53 0.51 0.61



NextYear 15.6 14.7

Past 5 Years -3.4 0.1



United Parcel Service Inc

11.07 50.67

Deutsche Post AG 24.84 10.62

Li & Fung LTD. 24.52 16.69

Business Summary: FedEx, which pioneered overnight delivery in 1973 and remains the world’s largest express delivery fi rm, derives about two thirds of its revenue from its express division. The company’s ground seg-ment delivers small parcels at a lower cost than express to the entire U.S., and the freight segment provides less-than-truckload freight services. FedEx Offi ce provides document production and shipping services, and Trade Networks offers freight forward-ing services.

Investment Rationale/Risk: ➤Well positioned for 2012 with their increases in capital expenditures and the company’s increased global presence.

➤ Invested into the future, trying to become more operationally effi cient and successful.

➤Outstanding effi ciency, profi tability, fi nancial health, and growth ratios that will help the company continue to outperform in the future.



HOLD: Intel Corp. (NASDAQ:INTC)ANALYST: Matthew Diehl 10/20/11SECTOR: Technology STOCK TYPE: Large CoreMKT CAP: $139.2 Billion HOLDING RETURN (2011): 13.48%MORNINGSTAR RATING: *** 52 WEEK RANGE (2011): $19.19-25.66CURRENT PRICE: $24.25 FAIR VALUE: $26.00


Total Return % 33.88 -42.96 42.97 6.18 19.03 -3.86

ROA% 13.41 9.95 8.42 19.72 19.27 1.58

ROE% 17.55 12.93 10.82 25.16 27.15 -1.86

Net Margin % 18.20 14.08 12.44 26.28 23.97 -0.16

Asset Turnover 0.74 0.71 0.68 0.75 0.80 0.81

Financial Leverage

1.30 1.30 1.27 1.28 1.55 N/A

Operating Margin %

21.4 23.8 16.3 35.7 32.4 2.6

Revenue Growth %

8.34 -1.95 -6.54 24.19 23.79 1.06

EPS Growth % 37.21 -22.03 -16.30 161.04 18.91 N/A

Current Ratio 2.79 2.54 2.79 3.39 2.15 3.2

Valuation Analysis

22007 2008 2009 2010 2011

P/E 22.6 15.9 26.5 10.5 10.1

P/B 3.6 2.1 2.7 2.3 2.7

P/S 4.1 2.2 3.3 2.7 2.5

P/FCF 12.5 7.7 10.3 7.2 6.4

Dividend Yield 1.69 3.73 2.75 3.00 3.23


Current Year 0.1 -35.7

Next Year 7.3 23.9



Business Summary: Intel Corporation, incorporated in 1968, designs and manufactures integrated digital technology platforms. A platform consists of a microprocessor and chipset. The Company sells these platforms pri-marily to original equipment manufacturers (OEMs), original design manufacturers (ODMs), and industri-al and communications equipment manufacturers in the computing and communications industries. The Company’s platforms are used in a range of applica-tions, such as personal computers (PCs) (including Ultrabook systems), data centers, tablets, smart-phones, automobiles, automated factory systems and medical devices. The Company also develops and sells software and services primarily focused on security and technology integration.

Investment Rationale/Risk: ➤ Intel is the dominant force in the computer processor market. They have benefi ted tremendously from the proliferation of personal computers in the past few decades.

➤ Intel has been the leader in microprocessor technology and performance and we see little change in that position in the near future. Intel has a massive research and development budget. With this large budget, they have the resources to invest in cutting-edge technology that their competitors can not match.

➤There are some obstacles that Intel may encounter in the coming years. The maturation of the PC market is one concern of ours and we see that posing challenges for growth in the future.

However, Intel is sound fi nancially with plenty of cash on hand and offers a dividend higher than the industry average.


Texas Instruments -8.71 20.91

Broadcom -31.76 15.02

NVIDIA Corp. -10.00 15.86



BUY: Juniper Networks Inc. (NYSE:JNPR)ANALYST: Matthew Diehl 12/08/11SECTOR: Technology STOCK TYPE: Mid GrowthMKT CAP: $11.2B HOLDING RETURN (2011): 0.79%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $17.08-$44.46CURRENT PRICE: $20.41 FAIR VALUE: $30.00


Total Return % 75.29 -47.26 52.31 38.43 -44.72 -17.52

ROA% 5.06 7.27 1.58 7.70 4.61 3.02

ROE% 6.29 9.09 2.00 9.95 5.42 3.31

Net Margin % 12.72 14.33 3.53 15.11 9.56 -3.8

Asset Turnover 0.40 0.51 0.45 0.51 0.48 0.75

Financial Leverage

1.29 1.22 1.30 1.28 1.41 N/A

Operating Margin %

14.4 19.5 9.4 18.8 13.9 -1.83

Revenue Growth %

23.12 25.96 -7.18 23.44 8.68 5.87

EPS Growth % N/A 50.00 -76.34 422.73 -31.30 N/A

Current Ratio 1.85 2.67 2.09 2.18 3.03 2.15

Valuation Analysis

22007 2008 2009 2010 2011

P/E 53.5 18.8 122.0 32.2 25.8

P/B 3.2 1.6 2.4 2.9 1.5

P/S 6.8 2.7 4.3 4.9 2.5

P/FCF 24.4 11.0 17.9 24.5 11.2

Dividend Yield N/A N/A N/A N/A N/A


Last Qtr. -21.2 -5.8

Last Year 47.3 23.2




Cisco Systems -9.74 14.19

Qualcomm 12.21 17.82

Riverbed Technology -33.18 10.22

Business Summary: Juniper Networks designs and sells network infra-structure for private- and public-access networks. Customers use its products to securely deploy and manage services and applications across IP net-works. The company’s product portfolio includes network hardware, software, security, and optimiza-tion tools. Juniper sells directly and through resell-ers to network services providers, enterprises, and government agencies.

Investment Rationale/Risk: ➤Juniper is one of the few telecom equipment vendors that is fi nancially stable and healthy.

➤Juniper depends heavily on wireless carriers and we expect carriers to increase their budget on their networks in the following years to come.

➤2011 was a tough year for Juniper and their competitors and we look at Juniper’s shares as undervalued and as a terrifi c investment opportunity.



HOLD: Coca-Cola Co. (NYSE:KO)

ANALYST: Amanda Fitzpatrick 12/8/11SECTOR: Consumer Staples STOCK TYPE: Large CoreMKT CAP: $160B HOLDING RETURN (2011): 60.61%MORNINGSTAR RATING: *** 52 WEEK RANGE (2011): $61.29-$71.77CURRENT PRICE: $69.97 FAIR VALUE: $69.00


Total Return % 30.01 23.76 29.53 18.47 9.24 7.82

ROA% 16.33 16.86 15.30 19.42 11.21 5.43

ROE% 30.94 27.51 30.15 42.32 27.37 11.63

Net Margin % 20.73 18.18 20.02 33.63 18.42 5.36

Asset Turnover .79 .76 .69 .58 .61 1.36

Financial Leverage

1.99 1.98 1.96 2.35 2.53 N/A

Operating Margin %

25.1 26.4 26.6 24.1 21.8 8.21

Revenue Growth %

19.80 10.70 -2.99 13.32 32.53 13.61

EPS Growth % 18.98 -3.11 117.67 72.70 -27.08 -

Current Ratio 0.92 0.94 1.28 1.17 1.05 1.71

Valuation Analysis

22007 2008 2009 2010 2011

P/E 23.9 18.2 19.5 13.0 19.0

P/B 6.5 5.1 5.3 4.9 5.0

P/S 5.0 3.3 4.3 4.4 3.5

P/FCF 20.0 14.0 16.2 16.1 17.2

Dividend Yield 2.22 3.36 2.88 2.68 2.69



Next Year 9.9 14.4




PepsiCo Inc. (PEP) 4.66 30.73

Dr. Pepper Snapple (DPS)

15.73 25.67

Kraft Foods (KFT) 22.25 9.93

Business Summary: Coca-Cola is the world’s largest nonalcoholic bever-age company. The fi rm, which sells a variety of sparkling and still beverages, generates 70% of its revenue and about 80% of its operating profi t from outside of the United States. Coke’s core brands include: Coca-Cola, Sprite, Dasani, Powerade, and Minute Maid. Following the asset swap with CCE, Coke now owns around 80% of its distribution in North America.

Investment Rationale/Risk: ➤The class decided to hold for now.

➤During the spring 2012 semester, the class should reevaluate the stock to see if there is a possibility to sell.



HOLD: Lowe’s Companies Inc. (NYSE:LOW)ANALYST: Alex Andrussier 11/17/11 SECTOR: Consumer Discretionary STOCK TYPE: Large CoreMKT CAP: $38.7B HOLDING RETURN (2011): 3.43%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $18.11-$27.28CURRENT PRICE: $25.38 FAIR VALUE: $34.00


Total Return % -26.55 -3.40 10.32 8.94 3.19 15.27

ROA% 11.84 9.58 6.91 5.43 6.03 4.65

ROE% 20.66 17.65 12.85 9.61 10.81 9.75

Net Margin % 6.62 5.82 4.55 3.78 4.12 3.56

Asset Turnover 1.79 1.65 1.52 1.44 1.46 1.33

Financial Leverage

1.77 1.92 1.81 1.73 1.86 N/A

Operating Margin %

-0.33 -0.40 -0.58 -0.61 -0.68 6.05

Revenue Growth %

8.52 2.89 -0.11 -2.09 3.38 2.75

EPS Growth % 15.03 -6.53 -19.89 -18.79 17.36 -

Current Ratio 1.27 1.12 1.15 1.32 1.40 1.19

Valuation Analysis

22007 2008 2009 2010 2011

P/E 11.5 13.0 19.8 18.6 18.4

P/B 2.1 1.8 1.8 1.8 1.9

P/S 0.7 0.7 0.7 0.7 0.7

P/FCF 7.4 6.5 8.3 10.2 8.5

Dividend Yield 1.15 1.53 1.50 1.59 1.97


Last Qtr. 12.9 -

Last Year 8.2 16.1




Home Depot (HD) 19.22 21.1

Kingfi sher PLC (KFG) 24.61 10.6

Pier 1 Imports (PIR) 32.81 30.3

Business Summary: Lowe’s is the second-largest home-improvement retailer in the world and operates about 1,750 stores throughout the United States, Canada, and Mexico. The company’s stores offer products and services for home decorating, maintenance, repair, and remodeling. Lowe’s targets retail do-it-yourself and do-it-for-me customers, as well as commercial business clients.

Investment Rationale/Risk: ➤Recent company restructuring will improve earnings.

➤New Do-it-yourself program.

➤Positive earnings and estimates of recent.

➤ Increasing current ratio means more liquidity for expansion.

➤Consistent and high dividend.

➤Outperforms the industry in many key ratios.



HOLD: 3M Co. (NYSE:MMM)ANALYST: Andrew Kiely 12/8/11SECTOR: Industrials STOCK TYPE: Large CoreMKT CAP: $61.4B HOLDING RETURN (2011): 4.89%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $68.63-$98.19CURRENT PRICE: $81.73 FAIR VALUE: $100.00


Total Return % 10.66 -29.39 47.22 6.93 -2.75 -4.47

ROA% 17.81 13.77 12.10 14.23 13.87 1.27

ROE% 37.74 32.00 28.20 28.74 27.56 5.07

Net Margin % 16.74 13.69 13.81 15.32 14.46 3.08

Asset Turnover 1.06 1.01 0.88 0.93 0.96 0.36

Financial Leverage

2.10 2.59 2.13 1.93 2.05 N/A

Operating Margin %

25.32 20.65 20.82 22.20 20.86 3.96

Revenue Growth %

6.71 3.30 -8.49 15.31 11.06 12.25

EPS Growth % 10.67 -12.68 -7.57 24.56 5.86 -

Current Ratio 1.83 1.64 2.20 2.01 2.25 1.15

Valuation Analysis

22007 2008 2009 2010 2011

P/E 15.1 11.8 18.3 15.3 13.7

P/B 5.1 4.0 4.6 3.9 3.7

P/S 2.5 1.6 2.5 2.3 2.0

P/FCF 14.4 9.0 11.8 12.1 11.2

Dividend Yield 2.28 3.48 2.47 2.43 2.69


Last Qtr. -0.5 N/A

Last Year 5.8 8.8




Avery Dennison (AVY)

-29.90 11.51

E. I. du Pont de Nemours and Company (DD)

-4.93 39.07

Johnson & Johnson (JNJ)

9.67 17.02

Business Summary: Based in St. Paul, Minn., 3M manufactures a diversi-fi ed array of industrial products. Known especially for popular consumer products such as Scotch Tape and Post-It Notes, the company’s portfolio also of-fers liquid crystal display fi lms, health-care technol-ogy, heavy-duty adhesives, and more than 40 other technology platforms. 3M is an S&P 500 component and a part of the Dow Jones Industrial Average.

Investment Rationale/Risk: ➤Has invented some of the world’s greatest products.

➤Has a strong innovative culture and low cost manufacturing.

➤Very diverse, high-quality products.

➤Has brand recognition and customer appreciation.



HOLD: Microsoft Co. (NYSE:MSFT)ANALYST: Matthew Diehl 11/29/11SECTOR: Technology STOCK TYPE: Large CoreMKT CAP: $268.7 B HOLDING RETURN (2011): 2.52%MORNINGSTAR RATING: *** 52 WEEK RANGE (2011): $23.71-28.87CURRENT PRICE: $25.96 FAIR VALUE: $35.00


Total Return % 20.60 -44.10 59.47 -6.63 -4.55 -8.89

ROA% 27.51 29.26 24.93 30.02 33.10 12.88

ROE% 39.51 52.48 38.42 43.76 44.84 22.17

Net Margin % 27.51 29.26 24.93 30.02 33.10 17.7

Asset Turnover 0.77 0.89 0.78 0.76 0.72 0.76

Financial Leverage

2.03 2.01 1.97 1.86 1.90 N/A

Operating Margin %

36.2 37.2 34.8 38.6 38.8 26.12

Revenue Growth %

15.46 18.19 -3.28 6.93 11.94 22.8

EPS Growth % 18.33 31.69 -13.37 29.63 28.10 N/A

Current Ratio 1.69 1.45 1.82 2.13 2.60 2.05

Valuation Analysis

22007 2008 2009 2010 2011

P/E 20.2 10.4 16.8 11.9 9.4

P/B 9.7 5.0 6.1 4.8 3.7

P/S 5.9 2.9 4.7 3.7 3.1

P/FCF 15.5 8.8 13.0 9.6 8.1

Dividend Yield 1.15 2.37 1.71 1.97 2.62


Last Qtr. 1.4 15.3

Last Year 12.2 20.0




Oracle Corp. -17.32 24.22

VMware Inc. -6.43 16.88

Citrix Systems -11.24 13.49

Business Summary: Microsoft develops the Windows PC operating system, the Offi ce suite of productivity software, and enterprise server products such as Windows Server and SQL Server. The Windows PC and Offi ce franchises collectively account for nearly 60% of the fi rm’s revenue, and the server and tools busi-ness contributes 24%. The fi rm’s other businesses include the Xbox 360 video game console, Bing Internet search, business software, and software for mobile devices.

Investment Rationale/Risk: ➤Microsoft has a solid balance sheet with a large amount of cash on hand. They also pay a dividend that has been increasing year over year and that is greater than the industry average.

➤The announcement of a new Windows Operating system and new features that Microsoft is unveiling with the Xbox Kinect should help increase revenues in the future.

➤Two concerns that we have with Microsoft is the switch to the cloud and the decline in the PC market. However, we see Microsoft transitioning and expanding into new markets with the Xbox Kinect and Azure platform.



BUY: Annaly Capital Management, Inc. (NYSE:NLY)ANALYST: Alex Andrussier 10/25/11 SECTOR: Financial Services STOCK TYPE: Large ValueMKT CAP: $15.7B HOLDING RETURN (2011): -2.6%MORNINGSTAR RATING: N/A 52 WEEK RANGE (2011): $15.48-$18.72CURRENT PRICE: $15.96 FAIR VALUE: -


Total Return % 38.17 -1.27 25.33 18.56 2.68 -6.32

ROA% 0.93 0.58 3.06 1.64 0.34 0.32

ROE% 10.63 5.40 23.72 13.11 2.59 2.15

Net Margin % 80.15 26.09 91.30 84.89 51.21 15.55

Asset Turnover 0.01 0.02 0.03 0.02 0.01 0.05

Financial Leverage

10.72 8.22 7.40 8.57 7.04 101.2

Operating Margin %

- - 93.79 88.32 62.90 22.00

Revenue Growth %

231.95 -2.61 345.73 -30.85 -56.53 19.43

EPS Growth % 197.73 -51.15 450.0 -42.05 -81.86 -

Current Ratio - - - - - 0.29

Valuation Analysis

22007 2008 2009 2010 2011

P/E 13.9 24.8 4.9 8.8 43.1

P/B 1.7 1.2 1.0 1.2 1.0

P/S 11.4 6.5 4.5 7.6 20.6

P/FCF 10.6 7.3 0.9 1.0 5.4

Dividend Yield 5.72 13.11 14.64 14.79 15.29


Last Qtr. -30.2 -

Last Year -24.7 -2.5

Past 5 Years 24.0 -7.3



Vornado Realty Trust (VNO)

9.43 10.6

Stockland Co. (STKAF)

-10.67 8.6

MFA Financial (MFA) 12.35 13.0

Business Summary: Formerly known as Annaly Mortgage Management, Annaly Capital Management is a real estate invest-ment trust which invests in mortgage pass-through certifi cates, collateralized mortgage obligations, and other mortgage-backed securities. Interest and principal payments on the fi rm’s investments are guaranteed by government-sponsored agencies in-cluding Fannie Mae, Freddie Mac, and Ginnie Mae.

Investment Rationale/Risk: ➤Great Dividend payout.

➤Low volatility in the market.

➤Strong management.

➤ Increasing returns over last 3 years.

➤Better key ratios than industry.



HOLD: Novartis AG ADR (NYSE:NVS)ANAYLST: Jared Hammers 9/8/2011SECTOR: Healthcare STOCK TYPE: Large CoreMKT CAP: $134.9B HOLDING RETURN (2011): 8.19%MORNINGSTAR RATING: ***** 52 WEEK RANGE (2011): $51.65-$64.52CURRENT PRICE: $57.17 FAIR VALUE: $69.00


Total Return % -3.54 -5.55 12.83 11.34 .37 15.54

ROA% 16.65 10.66 9.67 8.95 7.57 4.93

ROE% 26.45 16.47 15.60 16.24 14.12 8.8

Net Margin % 31.38 19.24 18.62 19.00 15.35 6.87

Asset Turnover .53 .55 .52 .47 .49 0.4

Financial Leverage

1.53 1.56 1.66 1.95 1.78 N/A

Operating Margin %

17.18 21.1 22.1 22.4 18.5 11.51

Revenue Growth %

10.70 11.85 5.92 14.32 15.15 9.07

EPS Growth % 68.75 -30.0 2.79 15.45 -11.3 -8.69

Current Ratio 1.65 1.27 1.73 1.08 1.04 2.12

Valuation Analysis

22007 2008 2009 2010 2011

P/E 19.4 14.0 14.7 13.8 15.1

P/B 2.5 2.2 2.2 2.1 2.1

P/S 3.3 2.7 2.7 2.6 2.3

P/FCF 7.5 11.8 10.1 9.6 9.5

Dividend Yield 2.02 3.09 3.15 2.80 3.49



Next Year 8.2 5.0




Merck 8.93 11.49

Bristol Meyers 38.07 23.42

Eli Lilly 24.20 33.49

Business Summary: Novartis develops and manufactures health-care products within its fi ve main operating segments: branded pharmaceuticals, generic pharmaceuticals, diagnostic and vaccines, eye care, and consumer products.

Investment Rationale/Risk: ➤The decision was made to hold Novartis due to strong fi nancials and future prospects. With recent acquisitions and expansions, we are expecting future growth and continued profi ts.

➤The company also pays a dividend higher than industry competitors and has shown solid dividend growth in the past.

➤We expect Novartis to face challenges as one of their blockbuster drugs loses its patent in 2012. With that being said, we are confi dent that the growing product portfolio of Novartis will allow the fi rm to absorb this loss. The stability of Novartis and favorable valuations make this company an attractive holding in the IMP Portfolio.



HOLD: Proctor & Gamble Co. (NYSE:PG)ANALYST: Amanda Fitzpatrick 11/10/11SECTOR: Consumer Staples STOCK TYPE: Large CoreMKT CAP: $185.7B HOLDING RETURN (2011): 7.88%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $57.56-$67.72CURRENT PRICE: $66.71 FAIR VALUE: $72.00


Total Return % 16.35 13.69 0.86 9.21 6.90 11.18

ROA% 7.44 8.44 9.50 9.52 8.68 .50

ROE% 16.05 17.83 20.39 20.89 18.32 .99

Net Margin % 13.31 14.25 16.76 15.86 14.01 11.83

Asset Turnover .56 .59 .57 .60 .62 .07

Financial Leverage

2.11 2.11 2.18 2.14 2.08 2.29

Operating Margin %

20.2 20.5 20.4 20.3 19.2 14.55

Revenue Growth %

12.10 6.89 6.18 2.93 4.59 13.61

EPS Growth % 15.15 19.74 17.03 3.52 4.38 -

Current Ratio .78 .79 .71 .77 .78 .09

Valuation Analysis

22007 2008 2009 2010 2011

P/E 22.2 16.6 16.3 17.5 19.6

P/B 3.4 3.0 2.6 2.9 2.9

P/S 3.1 2.4 2.4 2.5 2.3

P/FCF 16.1 14.2 11.0 14.5 14.9

Dividend Yield 1.85 2.51 2.84 2.93 3.08



Next Year 9.4 12.1




Avon Products Inc. (AVP)

-4.84 31.83

Church & Dwight Co. (CHD)

34.32 15.83

Kao Corp. (KOACF.PK)

2.55 8.53

Business Summary: Since its founding in 1837, Procter & Gamble has be-come the world’s largest consumer product manu-facturer, with a lineup of famous brands. The brands are sold through three global business units, and include Tide laundry detergent, Charmin toilet paper, Pantene shampoo, Cover Girl cosmetics, and Iams pet food. Since 2001, the company has doubled the sales it derives from developing markets, acquired and integrated Wella and Gillette, and sold its phar-maceutical and coffee businesses.

Investment Rationale/Risk: ➤Decided to hold onto our shares of the company for multiple reasons.

➤We didn’t see any new developments in this company that we thought would be harmful or benefi cial to the company that would conclude us to take any action.

➤Therefore, we put this company on hold until we see any news releases or price changes with the stock.



HOLD: Snap-on Inc. (NYSE:SNA)ANALYST: Katelyn Howard 11/29/11SECTOR: Industrials STOCK TYPE: Mid-ValueMKT CAP: $3.5 B HOLDING RETURN (2011): 19.65%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $42.45-$64.09CURRENT PRICE: $50.62 FAIR VALUE: $70.00


Total Return % 3.59 -15.88 10.36 36.77 -8.24 -4.9

ROA% 6.69 8.65 4.35 5.2 7.47 6.52

ROE% 15.38 19.19 10.84 13.93 18.93 9.93

Net Margin % 6.38 8.3 5.68 7.12 9.68 10.99

Asset Turnover 1.05 1.04 0.77 0.73 0.77 0.7

Financial Leverage

2.16 2.28 2.67 2.69 2.4 N/A

Operating Margin %

11.43 13.63 10.61 12.65 16.65 16.81

Revenue Growth %

15.73 0.43 -17.2 10.87 8.97 6.92

EPS Growth % 82.84 31.72 -43 37.5 47.65 N/A

Current Ratio 1.86 2.08 2.27 2 2.62 3.21

Valuation Analysis

22007 2008 2009 2010 2011

P/E 14.9 9.7 18.2 17.7 10.8

P/B 2.2 1.9 1.9 2.4 1.9

P/S 1 0.8 1 1.3 1

P/FCF 12.2 10.6 7 23.5 23.1

Dividend Yield 2.3 3.05 2.84 2.16 2.57


Current Year 10.4 -2.7

Next Year 10.6 12.6


Next 5 Years 10 10


Stanley Black & Decker Inc

5.19 9.62

SKF Inc. 16.3 29.98

Makita Corp. -9.42 9.9

Business Summary: Snap-on manufactures and sells tools, equip-ment, diagnostics, repair information and systems solutions primarily for independent vehicle repair centers, but also for new vehicle dealerships, as well as industrial, government, agriculture, aviation and natural resources customers. Snap-on’s franchi-sees operate about 3,200 vans in the U.S., providing weekly contact with vehicle service technicians and shop owners.

Investment Rationale/Risk: ➤Strong fi nancials and a unique business model.

➤Steady dividend for over 30 years.

➤Steady increase in price from past fi ve years, stock price took a hit in mid July and was undervalued so we doubled our shares.



BUY: Tiffany & Co. (NYSE:TIF)ANALYST: Jennifer Spinka 11/08/11SECTOR: Consumer Discretionary STOCK TYPE: Mid GrowthMKT CAP: $8.9B HOLDING RETURN (2011): -13.8%MORNINGSTAR RATING: ** 52 WEEK RANGE (2011): $56.27-$83.82CURRENT PRICE: $66.26 FAIR VALUE: $56.00


Total Return % 18.63 47.23 84.85 47.02 8.21 11.49

ROA% 9.03 10.53 7.30 8.04 10.20 10.12

ROE% 13.97 17.65 13.64 15.26 18.14 10.02

Net Margin % 9.56 10.34 7.69 9.77 11.94 6.41

Asset Turnover 0.94 1.02 0.95 0.82 0.85 1.26

Financial Leverage

1.58 1.78 1.95 1.85 1.72 16.30

Operating Margin %

15.7 18.0 13.1 16.3 19.3 10.24

Revenue Growth %

10.72 14.76 -3.06 -4.88 13.86 10.88

EPS Growth % 2.86 22.22 20.91 21.26 36.02 8.10

Current Ratio 3.77 3.15 3.40 4.07 5.59 1.98

Valuation Analysis

22007 2008 2009 2010 2011

P/E 18.6 10.2 35.1 24.5 19.4

P/B 3.2 1.8 3.1 3.9 3.6

P/S 2.2 1.0 2.1 2.7 2.4

P/FCF 18.5 10.9 11.1 20.4 33.2

Dividend Yield 1.13 2.79 1.58 1.53 1.69



Next Year 14.1 13.1




Blue Nile, Inc. (NILE) -28.36 27.00

Moet Hennessy Louis Vuitton SA ( LVMH)

-13.83 18.38

Hermès International (HMI)

42.56 21.26

Business Summary: Tiffany is an international jeweler and specialty retailer. It designs and sells fi ne jewelry in addi-tion to fi ne china, fashion accessories, timepieces, fragrances, and gift items through more than 240 retail stores in the United States and abroad. It also offers its trademarked merchandise on its website and through its catalog.

Investment Rationale/Risk: ➤We decided to buy Tiffany and Co. as a way to take advantage of the luxury goods market over the holiday season.

➤Tiffany and Co has a positive outlook for the holiday and winter seasons.

➤Tiffany’s also has a solid growth plan for future opportunities. These opportunities include increasing their number and location of stores worldwide.



BUY: Valero Energy Corp. (NYSE:VLO)ANALYST: Troy Oberholtzer 12/6/2011SECTOR: Energy STOCK TYPE: Mid-CoreMKT CAP: $14.72B HOLDING RETURN (2011): -6.5%MORNINGSTAR RATING: *** 52 WEEK RANGE (2011): $17.17-$30.73CURRENT PRICE: $21.05 FAIR VALUE: $28.00


Total Return % 37.82 -68.29 -19.82 39.22 -7.66 -8.46

ROA% 13.01 -2.93 -5.66 0.88 5.20 1.59

ROE% 28.21 -6.63 -13.06 2.18 13.29 4.24

Net Margin % 5.49 -0.95 -2.91 0.39 1.66 8.18

Asset Turnover 2.37 3.09 1.95 2.25 3.13 N/A

Financial Leverage

2.31 2.20 2.42 2.50 2.61 N/A

Operating Margin %

7.26 0.47 -0.09 2.28 2.92 10.18

Revenue Growth %

8.77 18.68 -42.90 27.30 53.21 31.53

EPS Growth % 2.78 — — — 545.61 N/A

Current Ratio 1.24 1.52 1.40 1.54 1.26 0.21

Valuation Analysis

22007 2008 2009 2010 2011

P/E 9.1 -10.0 -25.8 14.3 5.7

P/B 2.1 0.7 0.6 0.9 0.7

P/S 0.4 0.1 0.1 0.2 0.1

P/FCF 7.7 3.8 5.0 4.3 3.0

Dividend Yield 0.69 2.63 3.58 0.87 1.43



Next Year 14.9 9.6



Peers Return (YTD)% ROE %

HollyFrontier 21.35 34.68

Sunoco Inc 3.25 -85.5

Tesoro Corp. 26.00 15.87

Business Summary: Valero Energy Corporation (Valero) is an indepen-dent petroleum refi ning and marketing company. The Company markets its refi ned products through an bulk and rack marketing network and it sells re-fi ned products through a network of approximately 6,800 retail and wholesale branded outlets in the United States, Canada, the United Kingdom, Aruba, and Ireland.

Investment Rationale/Risk: ➤Largest Independent U.S. refi ner.

➤Undervalued compared to peers.

➤Takes advantage of spread between Brent and WTI crude pricing.

➤Refi ning competitive advantage allows Valero to refi ne cheaper crude than peers.



HOLD: Vulcan Materials Company (NYSE:VMC)ANALYST: Marcus Lucchese 11/8/2011SECTOR: Basic Materials STOCK TYPE: Mid GrowthMKT CAP: $5.7B HOLDING RETURN (2011): -12.79%MORNINGSTAR RATING: ***** 52 WEEK RANGE (2011): $25.06 - $48.09CURRENT PRICE: $39.35 FAIR VALUE: $63.00


Total Return % -11.07 -9.55 -22.18 -13.88 -9.58 -10.19

ROA% 7.30 -0.05 0.35 -1.14 -0.85 1.91

ROE% 15.65 -0.11 0.80 -2.41 -1.83 3.69

Net Margin % 13.55 -0.11 1.13 -3.77 -2.76 7.98

Asset Turnover 0.54 0.41 0.31 0.30 0.31 0.20

Financial Leverage

2.38 2.53 2.11 2.10 2.17 N/A

Operating Margin %

21.47 6.82 5.52 -0.57 2.47 9.09

Revenue Growth %

-0.44 9.73 -26.32 -4.89 0.22 17.30

EPS Growth % -3.20 -- -- -- -- --

Current Ratio 0.46 0.54 0.87 1.36 2.12 0.31

Valuation Analysis

22007 2008 2009 2010 2011

P/E 17.0 -3,333.3 333.3 -55.6 -68.0

P/B 2.3 2.2 1.6 1.4 1.3

P/S 2.4 2.1 2.3 2.2 2.0

P/FCF 11.1 17.5 13.9 28.0 30.0

Dividend Yield 2.33 2.82 2.81 2.25 1.93



Next Year 165.7 33.0

Past 5 Years -165.2 -10.4



Martin Marietta Materials (MLM)

-16.15 5.81

Masco Corporation (MAS)

-14.85 -60.18

Owens-Corning (OC) -7.80 7.51

Business Summary: Vulcan Materials is the United States’ largest pro-ducer of construction aggregates (crushed stone, sand, and gravel). Vulcan also produces cement, asphalt, and concrete. Vulcan’s most important markets include California, Virginia, Florida, and Texas. In 2011, Vulcan sold 143 million tons of ag-gregates, 7 million tons of asphalt mix, 800,000 tons of cement, and 4 million cubic yards of concrete. As of Dec. 31, 2010, Vulcan had 14.7 billion tons of proven and probable aggregates reserves.

Investment Rationale/Risk: ➤Biggest producer of construction aggregates in U.S.

➤Federal multiyear highway bills benefi t Vulcan..

➤One risk is how highly correlated VMC is to the health of the U.S. economy.



HOLD: Verizon Communications Inc. (NYSE:VZ)ANALYST: Nicholas Pedersen 11/08/2011SECTOR: Communication Services STOCK TYPE: Large ValueMKT CAP: $109.6B HOLDING RETURN (2011): 34.63%MORNINGSTAR RATING: *** 52 WEEK RANGE (2011): $43.77 - $51.70CURRENT PRICE: $40.12 FAIR VALUE: $38.00


Total Return % 21.74 (18.03) 3.20 21.49 17.61 -2.01

ROA% 2.94 3.30 1.70 1.14 1.07 3.33

ROE% 11.14 13.93 8.76 6.36 6.45 7.15

Net Margin % 5.91 6.60 3.39 2.39 2.17 5.99

Asset Turnover .50 .50 .50 .48 .49 .52

Financial Leverage

3.70 4.85 5.46 5.70 6.41 N/A

Operating Margin %

16.7 17.3 13.0 13.7 11.6 11.31

Revenue Growth %

6.00 4.16 10.74 (1.15) 4.04 3.73

EPS Growth % (10.38) 18.95 (42.92) (30.23) (5.56) -

Current Ratio .76 1.01 .78 .73 1.01 1.36

Valuation Analysis

22007 2008 2009 2010 2011

P/E 23.0 15.0 25.7 39.7 47.2

P/B 2.5 2.4 2.4 2.8 3.2

P/S 1.4 1.0 .9 1.0 1.0

P/FCF 4.9 3.6 3.0 3.0 3.8

Dividend Yield 3.77 5.16 5.60 5.17 4.89


Current Year 15.9 (4.2)

Next Year 11.5 4.9

Past 5 Years (2.9) 10.3



AT&T (T) 8.78 3.63

Sprint Nextel (S) (44.68) (22.25)

China Mobile (CHL) 1.42 21.46

Business Summary: Verizon is the incumbent local phone company, serving about 25% of the U.S. population. The fi rm owns a long-haul network that reaches cities around the globe. Verizon Wireless, the fi rm’s 55%-owned partnership with Vodafone, serves about 98 million customers across the U.S. Verizon spun off its di-rectories unit in 2006 and its local phone operations in Maine, Vermont, and New Hampshire in 2008. Additional lines were spun off to Frontier Communi-cations in 2010.

Investment Rationale/Risk: ➤Loyal customer base.

➤Very level and safe stock with a high dividend (5.30%).

➤Wireless provider of Apple’s products, which has been one of the hottest fast money stocks of the past year.




HOLD: Weatherford International Ltd. (NYSE:WFT)ANALYST: Troy Oberholtzer 12/01/2011SECTOR: Energy STOCK TYPE: Large-CoreMKT CAP: $12.89B HOLDING RETURN (2011): -35.79%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $10.85-$28.11CURRENT PRICE: $14.64 FAIR VALUE: $23.00


Total Return % 64.15 -68.45 65.53 27.30 -35.79 -9.48

ROA% 9.18 9.13 1.44 -0.57 1.30 4.5

ROE% 15.77 17.26 2.82 -1.13 2.77 7.97

Net Margin % 13.67 14.10 2.87 -1.06 2.02 16.14

Asset Turnover 0.67 0.65 0.50 0.54 0.64 0.51

Financial Leverage

1.78 1.99 1.94 2.04 2.22 N/A

Operating Margin %

20.74 20.61 7.97 7.65 10.19 23.06

Revenue Growth %

19.05 22.58 -7.99 15.71 27.09 22.65

EPS Growth % 21.74 25.97 -81.96 — — N/A

Current Ratio 2.03 1.84 2.20 2.51 1.83 1.38

Valuation Analysis

22007 2008 2009 2010 2011

P/E 21.8 5.5 51.3 -151.5 43.1

P/B 3.1 0.9 1.4 1.9 1.2

P/S 3.0 0.8 1.5 1.7 0.9

P/FCF 27.3 6.8 21.1 15.0 13.3

Dividend Yield 0.00 0.00 0.00 0.00 0.00



Next Year 38.1 30.5

Past 5 Years -22.9 -0.6


Peers Return (YTD) % ROE %

Schlumberger -16.99 15.99

Haliburton -14.60 24.09

Baker Hughes -13.87 11.65

Business Summary: Weatherford International Ltd. (Weatherford), in-corporated in 1972, is a provider of equipment and services used in the drilling, evaluation, completion, production and intervention of oil and natural gas wells. Weatherford operates in over 100 countries and has manufacturing facilities and sales, service and distribution located in the oil and natural gas producing regions throughout the world.

Investment Rationale/Risk: ➤ International diversifi cation.

➤Specializes in Hydrolic-Fracturing technology needed for natural gas exploration.



HOLD: Waste Management Inc. (NYSE:WM)ANALYST: Katelyn Howard 11/29/11SECTOR: Industrials STOCK TYPE: Large GrowthMKT CAP: $16.3B HOLDING RETURN (2011): -5.98%MORNINGSTAR RATING: *** 52 WEEK RANGE (2011): $28.17-$39.61CURRENT PRICE: $32.71 FAIR VALUE: $35.00


Total Return % -8.54 4.74 5.52 12.78 -7.59 -16.53

ROA% 5.7 5.38 4.8 4.47 4.36 5.56

ROE% 19.36 18.59 16.31 15.19 15.59 9.03

Net Margin % 8.74 8.12 8.43 7.61 7.18 5.03

Asset Turnover 0.65 0.66 0.57 0.59 0.61 1.06

Financial Leverage

3.48 3.43 3.37 3.43 3.72 N/A

Operating Margin %

11.09 -0.89 -15.53 12.14 -4.16 10.29

Revenue Growth %

-0.4 0.59 -11.93 6.14 6.9 2.57

EPS Growth % 6.19 -1.79 -8.22 -1.49 3.03 N/A

Current Ratio 0.95 0.77 1.04 1 0.78 2.74

Valuation Analysis

22007 2008 2009 2010 2011

P/E 14.6 15.1 16.8 18.6 16

P/B 2.9 2.8 2.6 2.8 2.5

P/S 1.3 1.2 1.4 1.4 1.2

P/FCF 7 6.4 7.1 7.8 6.3

Dividend Yield 2.94 3.26 3.43 3.42 4.16



NextYear 11.1 11.8


Next 5 Years 10 13.1


Republic Services Inc.

11.72 7.59

Veolia Environment SA

49.41 1.83

Stericycle Inc. 7.34 20.9

Business Summary: Waste Management is the largest integrated waste services provider in the U.S., operating 271 active landfi lls and 294 transfer stations. In addition to its core collections and disposal business, the com-pany’s Wheelabrator segment operates 22 waste-to-energy plants that produce renewable energy.

Investment Rationale/Risk: ➤Leader in their industry.

➤Waste Management diversifi es their services, which allows them to diversify themselves from competitors and continue expanding their business.

➤They continue to acquire new acquisitions, Oakleaf being the newest, which the company expects great growth from in the future.



HOLD: Exxon Mobile Corporation (NYSE:XOM)ANALYST: Troy Oberholtzer 12/01/2011SECTOR: Energy STOCK TYPE: Large-CoreMKT CAP: $402.48B HOLDING RETURN (2011): 18.45%MORNINGSTAR RATING: **** 52 WEEK RANGE (2011): $63.08-$87.98CURRENT PRICE: $84.76 FAIR VALUE: $91.00


Total Return % 23.07 -13.14 -12.50 9.78 18.45 5.08

ROA% 17.61 19.24 8.36 11.37 12.96 5.84

ROE% 34.47 38.53 17.25 23.67 27.26 9.87

Net Margin % 10.04 9.47 6.21 7.95 8.44 4.58

Asset Turnover 1.75 2.03 1.35 1.43 1.54 0.81

Financial Leverage

1.99 2.02 2.11 2.06 2.14 N/A

Operating Margin %

25.61 24.84 11.20 13.82 15.06 6.66

Revenue Growth %

7.13 18.00 -34.94 23.39 26.93 13.17

EPS Growth % 9.97 19.37 -54.20 56.28 35.37 N/A

Current Ratio 1.47 1.47 1.06 0.94 0.94 1.04

Valuation Analysis

22007 2008 2009 2010 2011

P/E 12.9 9.2 17.1 11.8 10.1

P/B 4.2 3.6 2.9 2.5 2.6

P/S 1.3 0.9 1.1 0.9 0.9

P/FCF 10.1 6.9 11.6 7.4 7.6

Dividend Yield 1.46 1.94 2.43 2.38 2.18


Current Year -2.1 21.6

Next Year 7.5 8.3



Peers Return (YTD)% ROE %

Roya

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