The Value Line Investment Survey · 2 Product Guide — The Value Line Investment Survey CHAPTER 1...

The Value Line Investment Survey®

PRODUCT GUIDE

Smart research. Smarter investing.™

©2018 Value Line, Inc. All Rights Reserved. Value Line, the Value Line logo, The Value Line Investment Survey, The Most Trusted Name in Investment Research, “Smart research. Smarter investing.”, Timeliness, and Safety are trademarks or registered trademarks of Value Line, Inc. and/or its affiliates in the United States and other countries. All other trademarks are the property of their respective owners. Factual material is obtained from sources believed to be reliable and any information contained herein is provided without warranties of any kind. VALUE LINE IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN OR ANY DAMAGES OR LOSSES ARISING FROM ANY USE OF THIS REPORT. This report is strictly for each subscriber’s own, non-commercial, internal use. No part of this report may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. Value Line Arithmetic and Geometric indices calculated by Thomson Reuters. Information supplied by Thomson Reuters. 1502514

1 Product Guide — The Value Line Investment Survey

TABLE OF CONTENTS

CHAPTER 1 Getting Started 2

Part 1 — Summary & Index 2

Part 2 — Selection & Opinion 4

Part 3 — Ratings & Reports 4

Part 4 — Weekly Investment Research Email Bulletin 5

CHAPTER 2 Understanding the Value Line Page 6

Value Line Ranks 6

Analyst’s Commentary 7

Financial and Stock Price Projections 7

Annual Rates of Change 8

Calculating Annual Rates of Change 8

Historical Financial Data 8

CHAPTER 3 The Value Line Industry Report 9

Analytical Commentary 9

Industry Trends 9

Company/Industry Comparisons 10

Industry Timeliness 10

Relative Strength Chart 10

CHAPTER 4 Frequently Asked Questions 11

Sample Stock Page 14


CHAPTER

1Getting Started

The Value Line Investment Survey is designed to cover 90% of total U.S. stock market capitalization, all the familiar stocks mentioned in the news plus hundreds you may have never come across. The aim of this guide is to help you understand The Value Line Investment Survey and the information it contains so you can use this product to its full capabilities.

HOW TO USE THE VALUE LINE INVESTMENT SURVEY

The Value Line Investment Survey is a unique source of financial information designed to help investors make in-formed investment decisions that fit their individual goals and levels of risk. It is: (1) a proven forecaster of long-term appreciation for buy-and-hold investors, as well as of safety in bear markets; (2) a source of interpretative analysis of approximately 1,700 individual stocks and approximately 100 industries; and (3) a source of historical information that helps investors spot trends.

If you come across any unfamiliar terms as you read through this guide, please refer to the Glossary which is available on our website, www.valueline.com.

Part 1 — Summary & Index

Please begin with the Summary & Index. The front page contains a Table of Contents, three important market statistics, and a list of all the industries we follow in alpha-betical order with the relative industry rank to the right of the industry name and the page number of the industry

analysis in Ratings & Reports listed under PAGE. The market statistics are found in three boxes. The first box (A) has the median of estimated price/earnings ratios of all stocks with earnings in The Value Line Investment Survey. The second box (B) shows the median of estimated dividend yields (total dividends expected to be paid in the next 12 months divided by the recent price) of all dividend-paying stocks in The Survey. The third box (C) contains the estimated median price appreciation potential 3 to 5 years into the future for the approximately 1,700 stocks in The Survey.

Summary & Index

Industries, in alphabetical order .................................................................................................................................. 1Stocks, in alphabetical order .................................................................................................................................. 2-23Noteworthy Rank Changes ....................................................................................................................................... 24

Industries, in order of Timeliness Rank .................. 24Timely Stocks in Timely Industries .................... 25-26Timely Stocks (1 & 2 for Performance) ............. 27-29Conservative Stocks (1 & 2 for Safety) ............. 30-31Highest Dividend Yielding Stocks ........................... 32Stocks with High 3- to 5-year Price Potential ......... 32Biggest ″Free Flow″ Cash Generators ................... 33Best Performing Stocks last 13 Weeks .................. 33Worst Performing Stocks last 13 Weeks ................ 33Widest Discounts from Book Value ........................ 34

Stocks with Lowest P/Es ........................................ 35Stocks with Highest P/Es ........................................ 35Stocks with Highest Annual Total Returns ............. 36Stocks with Highest 3- to 5-year Dividend Yield .... 36High Returns Earned on Total Capital .................... 37Bargain Basement Stocks ...................................... 37Untimely Stocks (5 for Performance) ...................... 38Highest Dividend Yielding Non-utility Stocks .......... 38Highest Growth Stocks ........................................... 39

Advertising (33) ........................... 2388Aerospace/Defense (59) ............... 701Air Transport (28) .......................... 301Apparel (64) ................................. 2101Automotive (47) ............................. 101Auto Parts (8) ................................ 971Bank (23) ..................................... 2501Bank (Midwest) (19) ...................... 778

*Beverage (75) .............................. 1965Biotechnology (90) ........................ 832Brokers & Exchanges (21) .......... 1793Building Materials (30) ................. 1101Cable TV (38) .............................. 1017Chemical (Basic) (77) .................. 1596Chemical (Diversified) (1) ............ 2442Chemical (Specialty) (16) .............. 560Computers/Peripherals (43) ........ 1392Computer Software (53) .............. 2587Diversified Co. (32) ..................... 1738Drug (73) ..................................... 1605E-Commerce (70) ........................ 1814

*Educational Services (87) ........... 1998Electrical Equipment (50) ............ 1301Electric Util. (Central) (51) ............. 901Electric Utility (East) (52) .............. 138

Electric Utility (West) (85) ........... 2222Electronics (54) ........................... 1316Engineering & Const (81) ............ 1232Entertainment (26) ....................... 2326

*Entertainment Tech (91) ............. 2007Environmental (20) ........................ 410Financial Svcs. (Div.) (22) ........... 2535

*Food Processing (82) .................. 1901*Foreign Electronics (31) .............. 1984

Funeral Services (2) .................... 1837Furn/Home Furnishings (78) ....... 1148Healthcare Information (49) .......... 824Heavy Truck & Equip (25) ............. 151Homebuilding (3) ......................... 1124Hotel/Gaming (34) ............. 1843, 2348Household Products (88) ............. 1189Human Resources (14) ............... 1634Industrial Services (63) ................. 379Information Services (36) .............. 433IT Services (45) ........................... 2610Insurance (Life) (15) .................... 1553Insurance (Prop/Cas.) (55) ............ 757Internet (79) ................................. 2632Investment Banking (6) ............... 1806Investment Co. (--) ...................... 1204

Investment Co.(Foreign) (--) .......... 419Machinery (24) ............................ 1701Maritime (83) ................................. 330Medical Services (9) ...................... 796Med Supp Invasive (76) ................ 169Med Supp Non-Invasive (74) ........ 195Metal Fabricating (40) ................... 730Metals & Mining (Div.) (35) ......... 1580Natural Gas Utility (41) .................. 548Natural Gas (Div.) (27) .................. 525Newspaper (93) ........................... 2381Office Equip/Supplies (67) .......... 1408Oil/Gas Distribution (57) ................ 611Oilfield Svcs/Equip. (92) .............. 2418Packaging & Container (17) ........ 1174Paper/Forest Products (10) ......... 1164Petroleum (Integrated) (29) . 1649, 501Petroleum (Producing) (11) ......... 2398Pharmacy Services (12) ................ 964Pipeline MLPs (56) ........................ 621Power (71) ................................... 1215Precious Metals (65) ................... 1565Precision Instrument (62) .............. 112Public/Private Equity (97) ............ 2657Publishing (68) ............................ 2374

Railroad (42) .................................. 339R.E.I.T. (96) ................................. 1510Recreation (46) ............................ 2301

*Reinsurance (95) ......................... 2019Restaurant (66) ............................. 351Retail Automotive (7) ................... 2118Retail Building Supply (37) .......... 1138Retail (Hardlines) (44) ................. 2164Retail (Softlines) (61) .................. 2198Retail Store (48) .......................... 2134

*Retail/Wholesale Food (39) ......... 1945Semiconductor (18) ..................... 1346Semiconductor Equip (4) ............. 1378Shoe (58) ..................................... 2155Steel (5) ......................................... 741Telecom. Equipment (86) .............. 938Telecom. Services (60) ................. 918Telecom. Utility (89) .................... 1027Thrift (80) ..................................... 1501

*Tobacco (69) ............................... 1991Toiletries/Cosmetics (72) ............. 1006Trucking (13) ................................. 318Water Utility (94) ......................... 1783Wireless Networking (84) .............. 595

In three parts: This is Part 1, the Summary & Index. Part 2 is Selection & Opinion. Part 3 is Ratings & Reports. Volume LXXIII, No. 49.Published weekly by VALUE LINE PUBLISHING LLC, 551 Fifth Avenue, New York, NY 10176

© 2018 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. THE PUBLISHER IS NOTRESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for each subscriber’s own, non-commercial, internal use. No part of this publication may bereproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.

See back cover for important disclosures.

Part 1

Summary&

Index

THE ALUE LINEInvestment Survey®

File at the front of theRatings & Reports

binder. Last week’sSummary & Index

should be removed.

July 20, 2018

®

TABLE OF SUMMARY & INDEX CONTENTS Summary & IndexPage Number

SCREENS

The Median of EstimatedPRICE-EARNINGS RATIOS

of all stocks with earnings

18.626 Weeks Market Low Market High

Ago20.7

3-9-0910.3

1-26-1821.1

The Median of EstimatedDIVIDEND YIELDS

(next 12 months) of all dividendpaying stocks under review

2.0%26 Weeks Market Low Market High

Ago1.9%

3-9-094.0%

1-26-181.8%

The Estimated Median PriceAPPRECIATION POTENTIALof all 1700 stocks in the Value Line

universe in the hypothesizedeconomic environment 3 to 5 years hence

40%26 Weeks Market Low Market High

Ago25%

3-9-09185%

1-26-1820%

ANALYSES OF INDUSTRIES IN ALPHABETICAL ORDER WITH PAGE NUMBERNumeral in parenthesis after the industry is rank for probable performance (next 12 months).

*Reviewed in this week’s issue.

PAGE PAGE PAGE PAGE

A C

B


While that median may prove to be optimistic, it serves as an indicator of the relative level of the market. By studying these statistics, a fairly good picture emerges of how the universe of Value Line stocks is currently being evaluated. The Value Line universe of approximately 1,700 stocks comprises approximately 90% of the market capitaliza-tion of all stocks traded in U.S. markets.

Beginning on page 2, the Summary & Index also includes an alphabetical listing of all stocks in the publication with references to their location in Part 3, Ratings & Reports. If you are looking for a particular stock, look inside the Summary & Index section, which is updated each week to provide the most current data on all companies included in The Value Line Investment Survey.

To locate a report on an individual company, look for the page number just to the left of the company name. Then turn to that page in Part 3, Ratings & Reports, where the number appears in the upper right corner.

In the far left column of the Summary & Index is a number that refers to recent Supplementary Reports, if any, which are included on the back pages of Ratings & Reports. If two asterisks (**) appear in this column, it means that there is a Supplementary Report in the current Issue.

There are many columns in the Summary & Index with more information on each of the approximately 1,700 stocks we cover, including from left to right:

• Page numbers for the latest company report and any recent Supplementary Report (Supplementary Reports are published at the back of Ratings & Reports)

• The name of each stock and the exchange on which it is traded (the New York Stock Exchange, unless otherwise indicated)

• Each company’s stock exchange (ticker) symbol

• The recent stock price (see the top of page 2 in Summary & Index under Index to Stocks for the specific date)

Value Line’s proprietary Timeliness™, Safety™ and Technical ranks (See Chapter 3 and the online Glossary for definitions. For a more detailed review, read The Value Line Ranking System Guide.)

• Beta (a measure of volatility)

• Each stock’s 3- to 5-year projected Target Price Range and the percent appreciation potential

• Each stock’s current P/E ratio

• Each stock’s estimated dividend yield

• Each stock’s estimated earnings (approximately six months historical, six months estimated)

• Estimated dividends for the next 12 months

• The Value Line Industry rank (see Chapter 6)

• Latest earnings and dividend declarations

• Whether options are traded

Toward the back of each Summary & Index, we provide stock screens that we believe will provide a good starting point for any investor. The screens are updated weekly and cover a broad range of investment options. They are also useful for investors who want a list of stocks relevant to specific strategies they may have in mind.

Some examples of our useful screens are:

• Conservative Stocks (stocks ranked above average for Safety)

• Highest Dividend Yielding Stocks

• Stocks Moving Up or Down in Timeliness Rank this week

• Timely Stocks in Timely Industries

• Industries in Order of Timeliness

• Stocks with the Highest Estimated 3- To 5-Year Price Appreciation Potential

• Best/Worst Performing Stocks in the Past 13 Weeks

• Stocks With the Lowest and Highest P/E Ratios

• Stocks with the Highest Projected 3- To 5-year Dividend Yield

• Highest Growth Stocks

• Bargain Basement Stocks


PART 2 — SELECTION & OPINION

Selection & Opinion (S&O) contains Value Line’s weekly economic and stock market commentary, along with ad-ditional information, such as one or more pages of research on interesting stocks or industries, and a variety of pertinent economic and stock market statistics. Of greatest interest to those who want more investment guidance than a static stock screen, Selection & Opinion also includes four model stock portfolios (Stocks with Above-Average Year-Ahead Price Potential, Stocks for Income and Potential Price Appreciation, Stocks with Meaningful Long-Term Price Growth Potential, and Stocks with Above-Average Dividend Yields). These portfolios are overseen by senior Value Line analysts and updated weekly. We also provide stock screens and stock highlights in Selection & Opinion that go beyond those included on a weekly basis in the Summary & Index and often provide a different and unique view of an invest-ment approach. The stock highlights are a more in-depth review of a company that we believe merits a look by our readers. These two options offer another convenient start-ing point for considering stocks for inclusion in your own portfolio. If you spend time with Selection & Opinion each week, you should be able to get some valuable investment ideas that suit your approach.

PART 3 — RATINGS & REPORTS

Ratings & Reports is the core of The Value Line Investment Survey with one-page reports on approximately 1,700 companies and one-page reports on approximately 100 industries. The company reports contain a summary de-scribing the business, Value Line proprietary ranks, our 3- to 5-year forecasts for stock prices, income and balance sheet data, as much as 17 years of historical data, capital structure and our analysts’ commentaries. They also contain stock price charts; quarterly sales, earnings, and dividend information; and a variety of other very useful material. Each page in this section is fully updated every 13 weeks. When unexpected important news occurs during these 13 week intervals, a Supplementary Report (appearing in the back section of Ratings & Reports) is published. If there is a Supplementary Report, its page number will be shown in the far left hand column of the Summary & Index, near the company name (two asterisks — * * — indicate that a Supplementary Report is in this week’s Edition).

Every week subscribers receive a new Issue of Ratings & Reports containing approximately 135 company reports grouped by industry and six or eight one-page industry reports. The industry reports precede the reports on the companies in that industry. Over the course of three months, new reports are issued on all of the approximately 1,700 companies and some 100 industries.

Selection & Opinion Ratings & Reports

Published weekly by Value line Publishing llC 551 Fifth avenue, new York, nY 10176

© 2018 Value line, inc. all rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. The PublisheR is nOT ResPOnsible FOR anY eRRORs OR OMissiOns heRein. This publication is strictly for each subscriber’s own, non-commercial, internal use. no part of this publication may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product. Officers, directors, employees and affiliates of Value line, inc. (“Vli”) and eulaV asset Management, llC (“eulaV”), may own stocks that are reviewed or recommended in this publication. nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice.see back cover for important disclosures.

The Selection & Opinion Index appears on page 2344 of the May 18, 2018 issue.

Dear Subscribers,

As part of our ongoing efforts to keep The Value Line Investment Survey the most valuable investment resource for our subscribers, all updated Ranks are now being released on the Value Line Web Site by 8:00 A.M. Eastern Time on Mondays. You can access all the Ranks each week at www.valueline.com by entering your user name and password. We look forward to continuing to provide you with accurate and timely investment research. Thank you.

In Three Parts: Part 1 is the Summary & Index. This is Part 2, Selection & Opinion. Part 3 is Ratings & Reports. Volume LXXIII, Number 49.

The Value Line View

In This IssueThe Value Line View 2229Model Portfolios: Recent Developments 2230The Fixed-Income View: More Tightening Ahead 2233Featured Screen: Stocks with Above-Average Price Growth Persistence 2234Growth Stocks with Low Risk 2236Selected Yields 2237Federal Reserve Data 2237Tracking the Economy 2238Major Insider Transactions 2238Market Monitor 2239Value Line Asset Allocation Model 2239Industry Price Performance 2239Changes in Financial Strength Ratings 2239Stock Market Averages 2240

July 20, 2018

ISSUE 10Pages 2229-2240

ECONOMIC AND STOCK MARKET COMMENTARY

T he economy was on a roll as the second half began, with much of this strength apparent in the manufacturing and non-manufacturing areas. The gains shown by these broad industrial and con-sumer categories were especially note-worthy in new orders and production. At the same time, the Labor Department issued a stronger-than-expected jobs report, with the addition of 213,000 positions in June and upward revisions for April and May.

We think the good news can continue. The strong growth of orders in manufac-turing and non-manufacturing, the fact that jobless claims are at historically low levels, and the further uptick in personal income suggest that a reasonably solid economic uptrend will remain in place in the second half.

However, there are headwinds out there, and these revolve around the escalating trade war with China following our an-nouncement of possible new tariffs aimed at that economic giant. Persisting trade conflicts with several of our allies, mean-time, which are causing businesses to warn of instability, lost sales, and ultimately job losses, suggest that the 4% plus rate of GDP growth likely achieved in the second

quarter may not be fully sustainable going forward.

One area of concern is unlikely to be cor-porate earnings, at least for now, where consensus estimates for the second quarter call for profit growth on the order of 20% for companies in the S&P 500 Index. Here, as well, we look for moderating gains down the stretch of 2018, especially if the trade rift with China intensifies still further or if wage growth exceeds expectations.

On balance, the investment picture re-mains bright. But just how much of this good news on the economy and earnings already is reflected in the still-elevated level of the stock market is an open question. That is what investors will need to consider as the second half progresses, especially if a possible summer rally raises P/E ratios still further.

Conclusion: Our sense is that we’re in a range-bound market, with investors thus far generally able to shrug off the trade war fears, but still likely to be vulnerable to dour news and rumors on that vexing front. That should keep volatility high. Please refer to the inside back cover of Selection & Opinion for our Asset Allocation Model’s current reading. ■

CLOSING STOCK MARKET AVERAGES AS OF PRESS TIME

7/3/2018 7/11/2018%Change 1 week

%Change 12 months

Dow Jones Industrial Average 24174.82 24700.45 +2.2% +15.4%Standard & Poor’s 500 2713.22 2774.02 +2.2% +14.4%N.Y. Stock Exchange Composite 12494.70 12681.59 +1.5% +8.0%NASDAQ Composite 7502.67 7716.61 +2.9% +24.6%NASDAQ 100 7014.55 7243.98 +3.3% +26.9%Amex Major Market Index 2743.68 2728.79 -0.5% +9.3%Value Line (Geometric) 571.09 579.31 +1.4% +11.4%Value Line (Arithmetic) 6328.74 6423.61 +1.5% +16.4%London (FT-SE 100) 7593.29 7591.96 0.0% +3.6%Tokyo (Nikkei) 21785.54 21932.21 +0.7% +8.6%Russell 2000 1660.42 1683.66 +1.4% +19.2%

THE VALUE LINEInvestment Survey®

Part 3

Ratings&

Reports

PAGE PAGE

© 2018 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. THE PUBLISHER IS NOTRESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for each subscriber’s own, non-commercial, internal use. No part of this publication may bereproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.See back cover for important disclosures.

FOOD PROCESSINGINDUSTRY ........................................... 1901

Archer Daniels Midland ................. 1902B&G Foods, Inc. ............................. 1903Bunge Limited ................................ 1904Cal-Maine Foods, Inc. .................... 1905Calavo Growers, Inc. ...................... 1906Campbell Soup ................................ 1907Conagra Brands .............................. 1908Dean Foods Co. ............................... 1909Flowers Foods, Inc. ........................ 1910Fresh Del Monte Produce, Inc. ....... 1911Freshpet, Inc. .................................. 1912General Mills .................................. 1913Hain Celestial Group ..................... 1914Herbalife Nutrition ........................ 1915Hershey Co. (The) ........................... 1916Hormel Foods ................................. 1917Hostess Brands ............................... 1918Ingredion Inc. ................................. 1919J&J Snack Foods Corp. .................. 1920Kellogg Co. ...................................... 1921Kraft Heinz Company (The) .......... 1922Lamb Weston Holdings .................. 1923Lancaster Colony ............................ 1924Maple Leaf Foods ........................... 1925McCormick & Co. ........................... 1926Medifast, Inc. .................................. 1927Mondelez Int’l ................................. 1928Nestle SA ........................................ 1929Nutrisystem, Inc. ............................ 1930Phibro Animal Health .................... 1931Pilgrim’s Pride Corp. ...................... 1932Pinnacle Foods Inc. ........................ 1933

★★ Post Holdings, Inc. ......................... 1934Sanderson Farms, Inc. ................... 1935Saputo Inc. ...................................... 1936Sensient Technologies .................... 1937Simply Good Foods (The) ............... 1938Smucker (J.M.) Co. ‘A’ .................... 1939Tootsie Roll Industries ................... 1940TreeHouse Foods, Inc. .................... 1941

★★ Tyson Foods, Inc. ‘A’ ....................... 1942USANA Health Sciences ................ 1943Unilever PLC (ADR) ....................... 1944

RETAIL/WHOLESALE FOODINDUSTRY ........................................... 1945

Alimentation Couche-Tard ............. 1946Casey’s General Stores ................... 1947Core-Mark Holding Company ........ 1948Empire Company Limited ............. 1949Ingles Markets, Inc. ....................... 1950

★★ Kroger (The) Co. ............................. 1951Loblaw Companies Limited ........... 1952

★ Metro Inc. ........................................ 1953★ Performance Food Group ............... 1954

Smart & Final Stores ..................... 1955SpartanNash Co. ............................ 1956

★ Sprouts Farmers Market, Inc. ....... 1957SUPERVALU INC. ......................... 1958

★ Sysco Corp. ..................................... 1959US Foods Holding Corp. ................ 1960

★ United Natural Foods, Inc. ............ 1961Village Super Market, Inc. ............. 1962Weis Markets, Inc. .......................... 1963Weston (George) Ltd. ..................... 1964

BEVERAGE INDUSTRY .................... 1965Anheuser-Busch InBev ................... 1966Boston Beer Co., Inc. ‘A’ ................. 1967Brown-Forman Corp. ‘B’ ................ 1968Coca-Cola Co. (The) ........................ 1969Coca-Cola Bottling Co. ................... 1970Coca-Cola European Partners ....... 1971Constellation Brands, Inc. ............. 1972Cott Corp. ........................................ 1973Craft Brew Alliance ........................ 1974Diageo plc ....................................... 1975Dr Pepper Snapple Group, Inc. ..... 1976MGP Ingredients ............................ 1977Molson Coors Brewing Co. ............. 1978Monster Beverage Corp. ................ 1979National Beverage Corp. ................ 1980PepsiCo, Inc. ................................... 1981Primo Water Corporation .............. 1982

★ SodaStream International ............. 1983

FOREIGN ELECTRONICS/ENT. INDUSTRY ................................. 1984

Canon Inc. (ADR) ........................... 1985FUJIFILM Holdings (ADR) ........... 1986

★★ Hitachi, Ltd. (ADR) ........................ 1987Panasonic Corp. .............................. 1988Philips Electronics N.V. ................. 1989Sony Corp. (ADR) ........................... 1990

TOBACCO INDUSTRY ...................... 1991★ Altria Group, Inc. ........................... 1992

Brit. Amer. Tobacco (ADR)) ............ 1993Philip Morris International, Inc .... 1994Schweitzer-Mauduit Int’l ............... 1995Turning Point Brands .................... 1996Universal Corp. .............................. 1997

EDUCATIONAL SERVICESINDUSTRY ........................................... 1998

Adtalem Global Education ............. 1999Bridgepoint Education, Inc. ........... 2000

★ Bright Horizons Family Sol. .......... 2001Career Education Corp. ................. 2002Grand Canyon Education ............... 2003New Oriental Ed. & Tech. .............. 2004Rosetta Stone Inc. .......................... 2005Strayer Education, Inc. .................. 2006

ENTERTAINMENTTECHNOLOGY INDUSTRY .............. 2007

Activision Blizzard, Inc. ................. 2008Daktronics, Inc. .............................. 2009Dolby Laboratories ......................... 2010Electronic Arts ................................. 2011Glu Mobile, Inc. .............................. 2012

★ Immersion Corp. ............................. 2013SeaChange Int’l, Inc. ...................... 2014Take-Two Interactive ..................... 2015TiVo Corp. ....................................... 2016Universal Electronics, Inc. ............. 2017Zynga Inc. ....................................... 2018

REINSURANCE INDUSTRY ............ 2019Argo Group Int’l ............................. 2020Aspen Insurance Holdings Ltd. ..... 2021Assured Guaranty Ltd. .................. 2022AXIS Capital Holdings Limited .... 2023

★★★★★★★★★★ Rank 1 (Highest) for Timeliness.★★★★★ Rank 2 (Above Average).

In three parts: Part 1 is the Summary & Index. Part 2 is Selection & Opinion. This is Part 3, Ratings & Reports. Volume LXXIII, No. 49

Published weekly by VALUE LINE PUBLISHING LLC, 551 Fifth Avenue, New York, NY 10176.

ESPECIALLY NOTEWORTHY:

ISSUE 10Pages 1900-2034

File in the binder in order ofissue number, removing

previous issue bearingthe same number.

July 20, 2018www.valueline.com

Everest Re Group, Ltd. .................. 2024Greenlight Capital Re, Ltd. ........... 2025Maiden Holdings, Ltd. ................... 2026RenaissanceRe Holdings Ltd. ........ 2027Third Point Reinsurance ................ 2028Validus Holdings ............................. 2029

SUPPLEMENTARY REPORTS ........ 2034

We welcome The Simply Good FoodsCompany, a Denver, Colorado-baseddeveloper, marketer, and seller ofbranded nutritional foods and snackofferings, to the Value Line InvestmentSurvey. Turn to page 1938 for our ini-tial report.

Conagra Brands (page 1908) contin-ues to transform its once far-rangingbusiness into a pure-play, branded foodcompany with its acquisition ofPinnacle Foods Inc. (page 1933).

Kroger (The) Co. stock has rallied oflate. Still, a modest price-to-earningsmultiple suggests the shares have moreroom to run over the long haul. Too, theissue is favorably ranked for Timeliness.For more on the retail food company’sprospects, turn to page 1951.

Nestle has agreed to buy the rights tomarket, sell, and distribute iconic cof-fee seller Starbucks offerings outside thebeverage chain’s coffee shops. For moreon the food giant’s bold step to enhanceits presence in the U.S. market, see page1929.

FUJIFILM’s purchase of Xerox has hita bump in the road. Learn more aboutthe contentious situation on page 1986.

Bright Horizons is a standout in theEducational Services Industry. Detailson this company and its timely stock canbe found on page 2001.

The short- and long-term outlooks forTyson Foods are promising. For moreon the prospects of the world’s largestfood processor, turn to page 1942.


PART 4 — WEEKLY NEWSLETTER

Subscribers to The Value Line Investment Survey also receive a weekly email newsletter that is sent out each Monday around 8:00 A.M. Eastern Time. The content is written by senior members of Value Line’s Research Department, and includes stock highlights, industry discussions, economic analysis, and top stories. The newsletter is also home to the $5 – $15 Model Portfolio, a 20-stock portfolio actively managed by a seasoned Value Line analyst. For inclusion, as the name suggests, stocks must be priced between $5 and $15 at selection time. A table displaying the current hold-ings is included each week, as well as a thorough write-up that discusses recent changes, news, and updated analysis.


CHAPTER

2Understanding

the Value Line PageTo start studying a stock, we suggest that you concentrate on four features found on every Ratings & Reports page (a sample is printed on the inside rear cover). We also have included an enlarged sample page with the welcome package for new subscribers. First, we recommend that you look at the Timeliness and Safety ranks (see item 1 of the sample page) shown in the upper left corner of each page. Then, note the Financial Strength rating and read the business description and the Analyst’s Commentary (item 4) in the bottom half of each report. Next, we suggest you look at our forecasts for various financial data including the stock price (items 2, 3, 6, 7, and 9). These forecasts are explained in more detail later in this Chapter. Finally, we think you should study the historical financial data appearing in the Statistical Array in the center of the report (item 8). Illustrations and more detail follow. There is also a lot of other useful information on each page, but the four features mentioned above provide the best place to begin.

VALUE LINE RANKS

(See 1 on the sample page)

A synopsis of the Value Line Ranking System follows. For a more detailed description, please refer to The Value Line Ranking System Guide.

Timeliness

The Timeliness rank is Value Line’s measure of the ex-pected price performance of a stock for the coming six to

12 months relative to our approximately 1,700 stock universe. Stocks ranked 1 (Highest) and 2 (Above Average) are predicted to perform better over the six to 12 months relative to the others. Stocks ranked 3 are to be average performers relative to the Value Line universe. Stocks ranked 4 (Below Average) and 5 (Lowest) are expected to underperform stocks ranked 1 through 3 in Value Line’s stock universe.

Just one word of caution. Stocks ranked 1 may prove volatile and often tend to have smaller market capitalizations (the total value of a company’s outstanding shares, calculated by multiplying the number of shares outstanding by the stock’s market price per share). Conservative investors will want to select stocks that have high Safety ranks because they are usually more stable issues.

Safety

The Safety rank is a measure of the total risk of a stock compared to others in our approximately 1,700 stock uni-verse. As with Timeliness, Value Line ranks stocks from 1 (Highest) to 5 (Lowest). The Safety rank is derived from two measurements found in the lower right corner of each page: a company’s Financial Strength and a stock’s Price Stability. Financial Strength is a measure of the company’s financial condition, and is reported on a scale of A++ (Highest) to C

Sample Ranks Box (Also see item 1, on the

sample page)


(Lowest). Larger companies with strong balance sheets get the highest grades. A stock’s Price Stability score is based on a ranking of the standard deviation (a measure of volatility) of weekly percent changes in the price of a stock over the last five years, and is reported on a scale of 100 (Highest) to 5 (Lowest) in increments of 5.

Technical

The Technical rank is primarily a predictor of short-term (three to six months) relative price change. It is based on a proprietary model which examines short-term price trends for a particular stock. The Technical ranks also range from 1 (Highest) to 5 (Lowest).

Beta

This is another measure of volatility, as calculated by Value Line. While it is not a rank, we do consider it important. See the online Glossary for more detail.

ANALYST’S COMMENTARY

(4 on the sample page)

Next, look at the analyst’s written commentary in the lower half of the page. Many readers think this is the most im-portant section of the page. In the commentary, the analyst discusses the company’s recent performance and his/her expectations for the stock’s future. There are times when the raw numbers don’t tell the full story. The analyst uses the commentary to explain why the forecast is what it is. The commentary is also particularly useful when a change in trend is occurring or about to occur. As an example, a stock may have a low (i.e., 4 or 5) Timeliness rank but the analyst thinks earnings are on track to turn around in the future. In this case, the analyst may use the commentary to explain why he/she thinks conditions are likely to get better, thus giving the subscriber insight into what is happening, and why, as well as the stock’s prospects.

FINANCIAL AND STOCK PRICE PROJECTIONS

Value Line’s securities analysts make a variety of financial and stock price projections in most reports we publish. They make Estimates for 23 different numbers and ratios going out 3 to 5 years into the future in the Statistical Array (item 3 on the sample page). They also forecast a projected

Target Price Range (item 2) for each stock, going out 3 to 5 years. And finally they show the 3- to 5- year Projections (item 9) for the price of the stock, along with the expected percentage appreciation (depreciation) and the expected annual total return (including dividends). These projections are discussed below.

Financial Estimates


In the Statistical Array in the center of the report (where most of the numbers are), Value Line provides both his-torical data and financial projections. All projections are printed in bold italics.

The estimates of sales, earnings, net profit margins, income tax rates, and so forth are all derived from spread sheets maintained on every company and updated quarterly. Afterward, they make whatever adjustments they believe are warranted by developments that may not be revealed in the numbers (e.g., the expected outcome of pending lawsuits affecting the company’s finances), the anticipated success of new products, etc.

Target Price Range

In the upper right-hand section of each report is a Target Price Range. The Target Price Range represents the band in which the expected average price is likely to fall in the next 3 to 5 years. The prices are based on the analyst’s projections in the period out 3 to 5 years for earnings multiplied by the average annual price/earnings ratio in the Statistical Array for the same period. The width of the high-low range depends

Sample Analyst’s Commentary (Also see items 3 and 8 on the sample page)


on the stock’s Safety rank. (A stock with a high Safety rank has a narrower range, one with a low rank, a wider band.) Five years is a long time in the stock market, and obviously it is difficult to accurately forecast individual firms’ future revenues and earnings that far into the future. In addition, price-earnings rations vary in different types of markets, as well as for individual firms. Moreover, there is a tendency for companies to make rosy forecasts, and for all Wall Street analysts to believe them. So as a whole, our price forecasts in the absolute have a tendency to be too high. Nevertheless, long experience has shown that our 3- to 5-year projections, when compared for one stock to the projections for other stocks in the same or different industries, have been a fairly reliable guide to future stock price performance.

3- to 5- Year Projections

(Item 9 on the sample page)

In the left hand column of each report, there is also a box which contains Value Line’s high and low stock price projec-tions for a period 3 to 5 years in the future. There you can see the potential average high and low prices we forecast, the percentage price changes we project, and the expected compound annual total returns (price appreciation plus dividends). To make these calculations, analysts compare the expected prices out 3 to 5 years into the future (as shown in the Target Price Range and Projections box) with the recent price (shown on the top of the report).

Investors whose primary goal is long-term price appre-ciation should study the 3- to 5-year Projections carefully and choose stocks with above-average price appreciation potential. For comparative purposes, you can find the weekly Estimated 3- to 5-Year Median Price Appreciation Potential for all approximately 1,700 stocks on the front page of the Summary & Index.

ANNUAL RATES OF CHANGE

(Item 7 on the sample page)

At this point, it may be helpful to look at the Annual Rates box in the left-hand column. This box shows the compound annual per share growth percentages for sales, “cash flow,” earnings, dividends and book value for the past 5 and 10

years and also Value Line’s projections of growth for each item for the coming 3 to 5 years. All rates of change are computed from the average number for a past 3-year period to an average number for the specified future period, which our analyst estimates. For details, see below.

Trends are important here. Check whether growth has been increasing or slowing and see if Value Line’s analyst thinks it will pick up or fall off in the future. Specific estimates for various data items for 3 to 5 years out can be found in bold italics print in the far right hand column of the Statistical Array (item 3 on the sample page).

CALCULATING ANNUAL RATES OF CHANGE (GROWTH RATES)

In an attempt to eliminate short-term fluctuations that may distort results, Value Line uses a three-year base period and a three-year ending period when calculating growth rates. Investors often try to calculate a growth rate from one starting year to one ending year, and then can’t understand why the number they get is not the same as the one pub-lished by Value Line. If they used a three-year base period (2015-2017) and three-year ending period, (2021-2023), they would get the same results we do.

HISTORICAL FINANCIAL DATA


Many investors like to use the Statistical Array to do their own analysis. They, in particular, use the historical data in the center of each report to see how a company has been doing over a long time frame. It is worth pointing out that while all of the data are important, different readers find different data items to be most useful.

The numbers are probably most helpful in identifying trends. For example, look at sales per share to see if they have been rising for an extended period of time. Look at operating margins and net profit margins to see if they have been expanding, narrowing or staying flat. And examine some of the percentages near the bottom, such as the Return on Shareholders’ Equity, to see if they have been rising, falling, or remaining about the same.


CHAPTER

3The Value Line Industry Report

All the company reports in The Value Line Investment Survey are grouped by industry, and at the front of each industry group is a one-page Industry Report.

The information contained in each Industry Report may differ considerably from one industry to another, but there is a general format we follow.

The number of industries followed in The Value Line Investment Survey is constantly changing. As companies drop out, usually because of mergers or acquisitions, we

may discontinue an industry. On the other hand, as new industries develop, we add them.

ANALYTICAL COMMENTARY

Much of each page contains analytical commentary. The text in each report is written by a Value Line securities analyst, who normally also follows a number (sometimes as many as 10 or 12) of the companies in the industry.

The text normally includes comments about important developments in the industry and the impact those develop-ments have been having on the companies. It also usually includes the analyst’s projections about the immediate and longer-term prospects for the industry. We always recom-mend that you read this report to get an idea of just what an analyst thinks about an industry.

INDUSTRY TRENDS

When purchasing a stock in a company, an investor should also know something about the industry in which a company is operating. Some important questions are:

• Is the industry growing?

• Are the industry’s operating and profit margins increasing or at least remaining steady?

• Stock prices

• Are the industry’s returns on total capital and shareholders’ equity rising or at least remaining steady?Sample Industry page

Medical Supplies (Invasive)

Index: June, 1967 = 100

80

120

160

RELATIVE STRENGTH (Ratio of Industry to Value Line Comp.)

240

320

2012 2013 2014 2015 2016 2017 2018

INDUSTRY TIMELINESS: 51 (of 97)

May 18, 2018 MEDICAL SUPPLIES INDUSTRY (INVASIVE) 169Companies within the Medical Supplies Indus-

try (Invasive) include firms that develop andmanufacture medical devices that require somelevel of incision into a patient’s body. Since ourlast report, the Industry as a group has fallen onthe Timeliness scale. At present, combined equi-ties are positioned in the second-half of all indus-tries covered by The Value Line Investment Survey.

Most of these companies have reported theirfirst-quarter results. Performances have beenmixed. Financial releases as well as geopoliticaldevelopments have led to overall volatility. Mar-ket gyrations are likely to continue over the near-term horizon. However, companies housed hereare adept at shifting business practices in linewith the general operating landscape.

Operational Efficiencies

There has been rampant consolidation activity withinthe Medical Supplies arena. Companies such asMedtronic and Zimmer Biomet Holdings have purchasedseveral complementary businesses in recent years.Merger benefits such as cost savings and expandedaddressable markets have begun to become accretive tocompanies’ earnings. Moreover, acquisitions should al-low an increase in top- and bottom-line potential sincesuch moves expand addressable markets and diversifyportfolios. We expect ongoing merger activities as thisaction also may eliminate competition and increase acompany’s market share.

Conversely, divestments have also been a noted trendin recent times. Sales of underperforming segments of abusiness are likely to be beneficial since such an actionshould help to improve the operating landscape. Eitheracquisitions or divestments serve to allow a firm tobecome more competitive.

Product Innovation

Research and development is arguably one of thebiggest growth catalysts here. Indeed, market approvalis the ultimate triumph, particularly if there is a direunmet clinical need for a therapy. The majority of thesefirms have intensified their respective pipelines in ef-forts to further augment their portfolios. Although bal-ance sheets may sometimes become more burdened,clinical studies that could potentially lead to launch-related expenses are likely to be well worth it.

High-Growth Categories

After a period of muted demand, the Cardiovascularcategory is once again gaining prominence. Hospitaladmissions for heart-related procedures have strength-ened, of late. In part, some of these surgeries are lifesaving and although others may be deferrable, a delaycan only be postponed for a certain time. In line withimproved demand trends, many of these companies willlikely continue to focus research efforts toward thedevelopment of new or next-generation cardiovascular-related devices.

Also, Neuromodulation is becoming a fast-growth seg-ment. This division is linked to multiple health issuesranging from spinal and mobility functioning, to painmanagement, and mental ailments. Ongoing positiveclinical findings highlighting the efficacy of neuromodu-lation therapies may drive further product innovation

over the short and long terms.

Stage Is Set For Growth Within The Industry

Given the rise in the aging population, demand formany of the products and services manufactured withinthe Medical Supplies Industry is likely to become evenmore vibrant over the 2021-2023 time frame. Evenpresently, individuals continue to seek a better quality oflife as seen through a shift in beverage choices andincreased exercise activities. Thus, demand in certainsegments, such as the aforementioned Neuromodulationcategory, may well cause higher demand even over ashorter period.

Role Of The FDA

The regulatory pathway is more intense depending onhow invasive a device may or may not be. Althoughhealthcare in general is evolving, regulatory scrutinyand safety requirements are a mainstay.

Conclusion

Many of these equities possess defensive attributesand may therefore be a safe-haven for conservativeinvestors. Indeed, medical needs do not abate in times ofeconomic downturns. Thus, investors may want to con-sider some of the stocks within this group as part of theirinvestment portfolios.

There are certain appealing long-term options. Someof these equities possess above-average capital apprecia-tion potential over the 2021-2023 time frame. To wit, thepursuit of ongoing growth platforms make long-termprospects in many cases appear bright.

As always, all investors are advised to read the indi-vidual reports that follow before committing any fundshere. The reports provide a more concise picture of anindividual company’s operations and consequently itsinvestment merits.

Nira Maharaj

© 2018 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No partof it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.

To subscribe call 1-800-VALUELINE


The answer to these questions can usually be found in the analyst commentary. In most cases, if an industry’s trends are favorable, the operating conditions for the companies in that industry will also be favorable. If the industry trends are negative, the opposite may be true.

COMPANY/INDUSTRY COMPARISONS

When you are investing in a company, you should also know how that company is performing relative to its industry. A company’s size and operating performance are both very important, and you should study them by looking at our individual company pages. However, you should also know if a company is well run. Some questions an investor should ask are:

• How does a company’s operating margin compare with its industry peer?

• How does a company’s net profit margin compare with its competitors?

• Are a company’s returns on total capital and on shareholders’ equity greater or less than others in the same sector?

If a company’s margins and returns are higher than its peers, the company is probably efficiently run. If the margins and returns are lower than most firms in the industry, the company is probably not being run as well as it could be.

WARNING! Many industries are dominated by one or two companies. When that is the case, company/industry comparisons may not be very useful. Be careful when making company/industry comparisons to make certain the comparisons are meaningful.

INDUSTRY TIMELINESS

At the top right of each industry report, we publish an Industry Timeliness rank on each of the approximately 100 industries we rank (excluding Investment Companies). These go in descending order from 1, which is the highest possible rank.

The first screen each week is Industries in order of Timeliness.

The Industry Timeliness ranks are calculated by averaging the Timeliness ranks of each of the stocks in a particular industry. If an industry has a large number of stocks ranked 1, the Industry Timeliness rank is likely to be high. If an industry has a large number of stocks ranked 4 or 5, the Industry rank is likely to be low.

The Industry ranks are updated weekly and published on the front cover and a subsequent inside page of the Sum-mary & Index. You should always look in the Summary & Index to make certain you have the most recent numbers.

RELATIVE STRENGTH CHART

In the lower right corner of most industry reports is a relative strength chart going back for as many as seven years. Relative strength compares the price of the stocks in that industry over time with the price of the Value Line Composite Index of approximately 1,700 stocks. When the relative strength line is rising, it means that the stocks in an industry are stronger than the broader market. When the line is falling, the stocks in an industry are weaker than the broader market.


CHAPTER

4Frequently Asked Questions

Why do some stocks not have a Timeliness rank?

Our computer-generated Timeliness ranks require at least two years of income statement and stock price history. If a stock has been trading for less than two years, possibly because a company is relatively new or because there was a major spinoff or acquisition, we are unable to assign a rank to it. We also suspend Timeliness ranks for unusual developments such as a merger offer, bankruptcy rumors or the payment of a large special dividend.

What exactly is the Technical rank?

The Technical rank uses a stock’s price performance over the past year to attempt to predict via our computer model short-term (three to six month) future returns. The stocks in our approximately 1,700-company universe are ranked in relation to all others on a scale of 1 (Highest) to 5 (Lowest).

Why does Value Line sometimes show different share earnings than those in a company’s annual report, or in The Wall Street Journal, or in a brokerage house report?

We each calculate earnings differently. In particular, Value Line often excludes what we consider to be unusual or one-time gains or charges in order to show what we consider to be “normal” earnings.

Company earnings often contain one-time nonrecurring or unusual items, such as expenses related to the early retirement of debt, a change in accounting principles, restructuring charges, or a gain or loss on the sale of assets. In order to

make a reasonable comparison of core operating results from one year to the next—or from one company to another—it is often necessary to exclude these items from reported earn-ings. Some items are relatively easy to take out because they are explicitly shown in the company’s income statement and footnotes. Others, however, must be estimated by our analysts. Any unusual adjustments to reported earnings will be disclosed in the footnotes of each Value Line report.

What is an operating margin?

The operating margin shows operating income (earnings before the deduction of depreciation, amortization, inter-est, and income taxes) as a percentage of sales or revenues. Operating income is sometimes referred to as EBITDA.

Why does the Value Line price/earnings ratio often differ from that in The Wall Street Journal or brokerage reports?

All price/earnings ratios are calculated by dividing the recent stock price by 12 months of earnings. The different ratios occur because our analyst uses different 12-months earnings figures. General-interest publishers typically use 12-months trailing (i.e., reported) earnings. Value Line uses a total of the past six months of trailing earnings and the next six months of estimated earnings. (In our view, this is the best method since it incorporates both recent history and a near-term forecast.) Your broker is likely to use a calendar year’s earnings. While we think our method is best, none is wrong. Just be sure that when you are comparing two companies’ P/E ratios, you are using the same methods.


I have trouble understanding some of your abbrevia-tions. Can you help me?

Yes. Most of the frequently used abbreviations are included in the online Glossary which is available at www.valueline.com.

SELECTION & OPINION MODEL PORTFOLIOS

How are stocks chosen for the Model Portfolios I, II, III, and IV in Selection & Opinion?

Each portfolio is dedicated to a different investment objec-tive. To make it more attractive and useful to conservative investors, Portfolio II must hold stocks that are ranked at least 3 (Average) for Safety.

Portfolio I, Stocks with Above-Average Year-Ahead Price Potential, is built on Value Line’s well-respected Timeliness Ranking System. It is primarily suitable for investors who wish to take more risk in hopes of greater returns than might be afforded in Portfolios II or III. To qualify for purchase, stocks have to be ranked 1 (Highest) or 2 (Above Average) for Timeliness. A stock that drops to 3 (Average) for Timeliness must be sold.

Portfolio II, Stocks for Income and Potential Price Apprecia-tion, attempts to combine our Timeliness Ranking System with an investment objective for above-average income. This portfolio is primarily suitable for more-conservative inves-tors. To qualify for purchase, a stock’s yield (the estimated annual dividend for the next 12 months divided by the recent stock price) must be higher than the median yield for all approximately 1,700 stocks Value Line follows. The median is shown on the cover of the Summary & Index each week. The higher-than-average yields provide support to the shares in down markets. This portfolio tends to be less volatile because the companies, as a whole, are more likely to be mature and predictable.

Portfolio III, Stocks with Worthwhile Long-Term Price Growth Potential, is based on the fundamental research of our staff of research analysts. This portfolio is suitable for investors with a 3- to 5-year horizon; in terms of risk, it falls somewhere between Portfolios I and II. This portfolio tends to be the most flexible, allowing purchases of a broader array of companies. It is constructed under the principles of modern portfolio theory, which state that the risk of a portfolio should be viewed within the context of a portfolio

as a whole, rather than judging the portfolio according to the average rankings of individual securities it holds. To that end, this portfolio is generally well diversified, comprising stocks in a variety of different non-related industries.

Portfolio IV focuses on stocks with above-average dividend yields. Investors with an interest in current income are likely to find interest here. Stocks selected for the portfolio must have a yield at least 1% above the median of all dividend-paying stocks tracked in The Value Line Investment Survey, and a strong Financial Strength rating.

Despite the focus on dividend yield and current income, stocks are typically selected from a broad range of indus-tries, providing a meaningful degree of diversification. The portfolio’s risk profile will likely be less than the broader market, given the usual concentration of low-Beta stocks.

The Selected Investments section of Selection & Opinion has four portfolios. Why isn’t there a “Conservative” portfolio?

Portfolio II, Stocks for Income and Potential Price Appre-ciation, is the one we would recommend for “conservative” investors. A key criterion for this portfolio is that the stocks have above-average dividend yields. These attractive yields lend support to stock prices when the market is declining. This portfolio usually also has slightly lower-than-market risk (volatility) as measured by the average Beta of the stocks within the portfolio.

FINANCIAL STRENGTH

What goes into the Financial Strength rating for each individual company?

Our Financial Strength ratings take into account a lot of the same information used by the major credit rating agen-cies. Our analysis focuses on net income, cash flow, the amount of debt outstanding relative to equity, the outlook for profits, the stability of the industry, and the individual company returns. Other factors also enter into the equa-tion. For example, a company that faces the loss of patent protection on a key product might face a downgrade. The ratings range from A++ (Highest) to C (Lowest), in nine steps, based on the judgment of our senior staff members. A rank of B+ is considered to be average.


STOCK DECLINES

I bought a stock based on your advice, but it went down. What happened?

Not all stocks do as we forecast, though, and we have never suggested that they will. What we have strongly recom-mended is that you diversify your portfolio by purchasing at least 10 to 20 stocks across 10 or more industries. That way, you will protect yourself from unexpected changes in the price of any one stock or any one industry.

PRETAX INCOME

Where can I find pretax income on a Value Line page?

You can’t. We do, however, show net profit after taxes (usually line 14 in the Statistical Array) and the effective tax rate (usually line 15). You can calculate pretax income by dividing net profit by: 1 minus the tax rate. Example: If net profit was $100 million and the tax rate was 36%, pretax profit would be $156.25 million.

$100,000,000

1.00 - .36 = $156,250,000

COMPANY COVERAGE

Does a company pay to be included in The Value Line Investment Survey?

No. Value Line is not compensated for coverage by the companies under our review. Subscribers can be assured that we are totally objective when we analyze companies in The Value Line Investment Survey.

Does the roster of stocks covered by Value Line change?

Yes. Vacancies constantly occur within our approximately 1,700 stock universe. Sometimes a company’s earnings will deteriorate to such a degree that we believe investors have lost interest. If that happens, we will discontinue coverage.

More frequently, companies leave our universe when they are acquired by or merged with another firm. Acquired or merged companies will be replaced by others. In choosing replacements, we try to select actively traded stocks with broad investor interest.

Why isn’t XYZ, Inc., a large well-known company, included?

We do try to include companies with actively traded stocks, which have broad public interest. If XYZ fits in this category, we will, in all likelihood, provide coverage in the future.

GROWTH RATES

How are the growth rates calculated in the Annual Rates of change box?

We use a compound annual rate that reflects the annual change for various items over the entire period being com-puted. All rates of change are computed from the average figure for a past 3-year period to an average for a future 3-year period, as established by our analyst.

TIMELINESS OF INFORMATION

When can I expect to receive updates of your information?

Our intention is for subscribers to receive The Value Line Investment Survey in print generally on Friday or Saturday. Unfortunately, circumstances beyond our control may cause later delivery.

To guarantee that subscribers have access to key informa-tion including the latest ranks at the same time, such data are released to subscribers through our Value Line Web site by 8:00 A.M. Eastern Time each Monday. All subscribers to any version of The Investment Survey (print or online) have access to the latest key data on www.valueline.com.

Sample Rates Box (Also see item 1, on the sample page)

Sample Financial/Stock Price Data (Also see item 5 on the sample page)

320

2001601201008060

40

18Percentsharestraded

302010

Target Price Range2020 2021 2022

HOME DEPOT NYSE-HD 181.80 23.2 25.217.0 1.14 2.3%

TIMELINESS 1 Raised 11/17/17

SAFETY 1 Raised 10/5/07

TECHNICAL 4 Lowered 12/8/17BETA 1.00 (1.00 = Market)

2020-22 PROJECTIONSAnnʼl Total

Price Gain ReturnHigh 210 (+15%) 6%Low 170 (-5%) 1%Insider Decisions

F M A M J J A S Oto Buy 0 0 0 1 0 0 0 0 0Options 9 9 0 4 0 0 3 1 0to Sell 3 1 0 6 0 0 2 1 0Institutional Decisions

1Q2017 2Q2017 3Q2017to Buy 755 800 882to Sell 889 819 770Hldʼs(000) 944962 924776 905348

High: 43.9 42.0 31.1 29.4 37.0 42.5 65.9 82.5 106.0 135.5 139.0 186.3Low: 32.8 25.6 17.0 17.5 26.6 28.1 41.9 62.4 74.0 92.2 109.6 133.0

% TOT. RETURN 11/17THIS VL ARITH.*

STOCK INDEX1 yr. 42.2 16.83 yr. 93.8 30.25 yr. 207.3 96.6

CAPITAL STRUCTURE as of 10/29/17

Total Debt $25589 mill. Due in 5 Yrs $6425 mill.LT Debt $24266 mill. LT Interest $1045 mill.(Total interest coverage: 13.9x. LT int earned:13.9x)

(91% of Capʼl)Leases, Uncapitalized Annual rentals $868 mill.No Defined Benefit Pension Plan

Pfd Stock None

Common Stock 1,167,748,619 shs.as of 11/14/17MARKET CAP: $212 billion (Large Cap)CURRENT POSITION 2015 2016 10/29/17

($MILL.)Cash Assets 2216 2538 3549Receivables 1890 2029 2166Inventory (LIFO) 11809 12549 13419Other 1078 608 548Current Assets 16993 17724 19682Accts Payable 6565 7000 8570Debt Due 427 1252 1323Other 5534 5881 6109Current Liab. 12526 14133 16002ANNUAL RATES Past Past Estʼd ʼ14-ʼ16of change (per sh) 10 Yrs. 5 Yrs. to ʼ20-ʼ22Sales 6.0% 11.0% 8.5%ʻʻCash Flowʼʼ 7.5% 17.5% 10.5%Earnings 7.5% 21.5% 11.0%Dividends 17.5% 19.5% 15.0%Book Value -8.0% -14.5% -25.0%FiscalYearBegins

FullFiscalYear

QUARTERLY SALES ($ mill.) A

Apr.Per Jul.Per Oct.Per Jan.Per2014 19687 23811 20516 19162 831762015 20891 24829 21819 20980 885192016 22762 26472 23154 22207 945952017 23887 28108 25026 23534 1005552018 25200 29450 26000 25525 106175FiscalYearBegins

FullFiscalYear

EARNINGS PER SHARE A B

Apr.Per Jul.Per Oct.Per Jan.Per2014 .96 1.52 1.10 1.00 4.562015 1.16 1.66 1.35 1.17 5.342016 1.44 1.97 1.60 1.44 6.452017 1.67 2.25 1.84 1.60 7.362018 1.88 2.53 2.07 1.92 8.40Cal- Full

endar YearQUARTERLY DIVIDENDS PAID C ■

Mar.31 Jun.30 Sep.30 Dec.312013 .39 .39 .39 .39 1.562014 .47 .47 .47 .47 1.882015 .59 .59 .59 .59 2.362016 .69 .69 .69 .69 2.762017 .89 .89 .89 .89

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201422.83 25.40 27.31 33.86 38.38 46.11 45.77 42.03 38.84 41.90 45.80 50.37 57.11 63.64

1.62 1.99 2.27 2.93 3.44 3.82 3.50 2.81 2.66 3.07 3.55 4.21 5.08 5.961.29 1.56 1.88 2.26 2.72 2.79 2.27 1.78 1.66 2.03 2.47 3.10 3.76 4.56

.17 .21 .26 .33 .40 .68 .90 .90 .90 .95 1.04 1.16 1.56 1.887.71 8.64 9.44 11.19 12.67 12.71 10.48 10.48 11.42 11.64 11.64 11.98 9.07 7.13

2345.9 2293.0 2373.0 2158.7 2124.0 1970.0 1690.0 1696.0 1698.0 1623.0 1537.0 1484.0 1380.0 1307.035.6 22.6 16.7 16.7 14.7 13.7 15.4 14.3 15.3 15.6 15.0 17.9 20.2 19.11.82 1.23 .95 .88 .78 .74 .82 .86 1.02 .99 .94 1.14 1.13 1.01.4% .6% .8% .9% 1.0% 1.8% 2.6% 3.5% 3.5% 3.0% 2.8% 2.1% 2.1% 2.2%

77349 71288 65955 67997 70395 74754 78812 8317633.6% 33.7% 33.9% 34.3% 34.5% 34.6% 34.8% 34.8%11.6% 8.6% 10.1% 11.0% 11.7% 12.7% 13.7% 14.6%

2234 2274 2244 2248 2252 2256 2263 22694210.0 2982.0 2811.0 3371.0 3883.0 4680.0 5385.0 6139.036.4% 37.4% 34.5% 36.7% 36.0% 36.5% 36.4% 36.4%

5.4% 4.2% 4.3% 5.0% 5.5% 6.3% 6.8% 7.4%1968.0 2209.0 3537.0 3357.0 5144.0 3910.0 4530.0 4033.011383 9667.0 8662.0 8707.0 10758 9475.0 14691 1686917714 17777 19393 18889 17898 17777 12522 9322.015.5% 11.9% 11.1% 13.0% 14.5% 18.3% 21.0% 25.0%23.8% 16.8% 14.5% 17.8% 21.7% 26.3% 43.0% 65.9%14.1% 8.2% 6.6% 9.5% 12.6% 16.5% 25.1% 38.7%

41% 51% 54% 47% 42% 37% 42% 41%

2015 2016 2017 2018 © VALUE LINE PUB. LLC 20-2270.70 78.63 87.45 95.20 Sales per sh A 116.20

6.82 8.07 9.20 10.45 ʻʻCash Flowʼʼper sh 12.505.34 6.45 7.36 8.40 Earnings per sh AB 10.252.36 2.76 3.56 4.16 Divʼds Declʼd per sh C■ 5.445.04 3.60 2.15 1.95 Book Value per sh E .95

1252.0 1203.0 1150.0 1115.0 Common Shs Outstʼg D 1050.022.1 20.3 Bold figures are

Value Lineestimates

Avg Annʼl P/E Ratio 18.51.11 1.08 Relative P/E Ratio 1.15

2.0% 2.1% Avg Annʼl Divʼd Yield 2.9%88519 94595 100555 106175 Sales ($mill) A 12200034.2% 34.2% 34.0% 34.1% Gross Margin 34.2%15.1% 16.0% 16.2% 16.3% Operating Margin 16.3%

2274 2278 2284 2290 Number of Stores 23056848 7957 8720 9700 Net Profit ($mill) 10765

36.4% 36.3% 36.3% 36.3% Income Tax Rate 36.3%7.7% 8.4% 8.7% 9.1% Net Profit Margin 8.8%4467 3591 3700 3800 Working Capʼl ($mill) 4000

20888 22349 24500 25000 Long-Term Debt ($mill) 250006316 4333 2500 2200 Shr. Equity ($mill) 1000

26.8% 31.6% 34.0% 37.5% Return on Total Capʼl 44.0%108.4% 183.6% NMF NMF Return on Shr. Equity NMF60.4% 105.1% NMF NMF Retained to Com Eq NMF

44% 43% 48% 50% All Divʼds to Net Prof 53%

Companyʼs Financial Strength A++Stockʼs Price Stability 95Price Growth Persistence 100Earnings Predictability 100

(A) Fiscal year ends Sunday closest to January31st of the following year.(B) Diluted earnings. Excludes nonrecurringgains/(losses): ʼ07, ($0.10); ʼ08, ($0.44); ʼ09,

($0.09); ʼ10, ($0.02); ʼ12, ($0.10); ʼ14, $0.15;ʼ15, $0.12. Totals may not sum due to round-ing. Next earnings report due February 20th.(C) Dividends historically paid in March, June,

Sept., and Dec. ■ Divʼd reinvest. plan avail.(D) In millions, adjusted for stock splits.(E) Includes intangibles. At 1/31/16: $2,102mill. ($1.68/share).

BUSINESS: The Home Depot, Inc. operates a chain of 2,283 retailbuilding supply/home improvement ʻʻwarehouseʼʼ stores across theU.S. and in Canada and Mexico (as of 10/29/17). Acquired HughesSupply in 1/06. Average store size: 104,000 sq. ft. indoor plus24,000 sq. ft. garden center. Items stocked: about 35,000. Productlines include building materials, lumber, floor/wall coverings; plumb-

ing, heating, and electrical; paint & furniture; seasonal and specialtyitems; hardware & tools. Has about 406,000 employees. Off. & dir.own less than 1.0% of common; Capital World Investors, 6.8%(4/17 Proxy). Chairman, CEO, & President: Craig Menear. In-corporated: DE. Address: 2455 Paces Ferry Road, Atlanta, Georgia30339. Telephone: 770-433-8211. Internet: www.homedepot.com.

The Home Depot’s fiscal third-quarter(ended October 29th) results weresolid. Sales rose 8% from a year earlier, to$25.026 billion, eclipsing our $24.475 bil-lion forecast. Comparable-store salesjumped 7.9%, while stores in the UnitedStates posted a 7.7% comp gain. Underly-ing demand was clearly strong, buthurricane-related sales gave a $282 mil-lion boost to comparable-store sales, ac-cording to management. In addition, wild-fires in the western U.S. and earthquakesin Mexico prompted spending on repairand rebuilding initiatives. Online salescontinued to do well, rising 19% year toyear and making up 6.2% of the top line.Sales to professionals once again outpacedgrowth in the do-it-yourself segment. Big-ticket sales (those above $900) were up12.1%, driven by categories such as floor-ing and appliances. While natural dis-asters gave a boost to revenues, the grossmargin on hurricane-related sales was be-low the company average. Combined with$104 million in hurricane-related damagesuffered by The Home Depot, the stormsactually hurt operating profit by $51 mil-lion in the October interim. The gross mar-

gin contracted 17 basis points year overyear, to 34.56%. Conversely, SG&Adecreased 44 basis points as a function ofthe top line. A lower share count alsohelped earnings per share jump 15% froma year earlier, to $1.84, matching our call.The housing market should keep ac-ting as a tailwind for The HomeDepot. Too, repair and rebuilding effortsare ongoing in several markets, so we ex-pect to see additional demand in the Janu-ary term, with the bump tailing off duringthe first half of fiscal 2018. All told,leadership now looks for sales and compsto increase 6.3% and 6.5%, respectively,for the year, each up one percentage pointfrom prior guidance. The estimate forstock repurchases was also raised by $1billion, to $8 billion. Consequently, shareearnings are now pegged at $7.36, up from$7.29. We think that there is more upsidethan downside to this number.Timely Home Depot stock is an entic-ing selection for many accounts, inour view, including those with a veryconservative bent or a focus ongrowth and/or current income.Matthew Spencer, CFA December 22, 2017

LEGENDS14.0 x ″Cash Flow″ p sh. . . . Relative Price Strength

Options: YesShaded area indicates recession

© 2017 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No partof it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.

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