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Joe Craig
Ellicott City, MD
StockCentral Administrator

11/30/2006 12:29 AM
Mark Robertson's workshop on Sleep-at-Night Investing begins here on December 4, 2006!

Joe

Mark Robertson
Rochester Hills, Michigan
www.manifestinvesting.com

11/30/2006 6:56 PM
Thanks, Joe. We'll get started in a few days, but I wanted to check in and set the stage a little. Why Sleep-at-night investing? Simple. Because I believe it describes the investing experience that the vast majority of investors seek. We want to be successful with a reasonable amount of effort -- and most of us have day jobs and we like to sail, golf, take a good nap or a nice walk in the woods. In short, we don't want to have to continuously worry about the condition of our investments. Over the few days of the workshop, I want to discuss a group of DOGs -- that's right, some of man's best friends. We'll take a look at the important characteristics of any investment. As we do that, I want to take the opportunity to demonstrate how StockCentral can be a pathway to excellent tools and even better people. Investing is all about Discover -- Diligence -- Discuss -- Decide -- Do it. StockCentral and its affiliated partners offer a powerful resource for helping you to become a better investor whether you're just getting started or you want to fine tune your portfolio design and maintenance efforts. Join us as we explore the roots of Sleep-At-Night investing, the powerful resources at your fingertips at StockCentral and successful long-term investing. Mark Robertson Mark Robertson is the founder of ManifestInvesting.com. Manifest Investing features an e-newsletter focusing on successful long-term investing including web-based investment research and features for stock and fund screening. Other tools provide resources for portfolio design and management. Mark formerly served as senior contributing editor for Better Investing magazine and has appeared on National Public Radio, CNBC, and ABC to discuss long-term investing. He has worked with Smart Money, Barron’s, Money magazine and The Motley Fool, and published features in the Chicago Tribune and a number of local publications.

Mark Robertson
Rochester Hills, Michigan
www.manifestinvesting.com

12/04/2006 4:21 PM
Welcome to Wherever You Are Welcome to the inaugural investing workshop at StockCentral. I'm honored to have been asked to kick things off -- and eager to share from some wonderful experiences I've gained over the last 15 years or so. Those who have followed my work over the years know that I've often cited music (most notably and most often, Faith Hill) in describing aspects of long-term investing. But Bon Jovi has captured the spirit of this workshop better at this time: Maybe we're all different, but we're still the same. We all have the blood of Eden running through our veins. I know sometimes it's hard for you to see. You come between just who you are and who you wanna be. If you feel alone -- and lost -- and need a friend. Remember every new beginning is some beginning's end. Welcome. To wherever you are. If you feel you're drowning -- in a shadow of a doubt; Everyone's a miracle in their own way. When it seems you're lost, alone and feeling down; Remember everybody's different -- Just take a look around. Be who you want to. Be who you are. Welcome. To wherever you are." -- Bon Jovi, 2005. Welcome. It doesn't matter whether you come seeking the first step on a lifetime of successful investing or whether you've been an active investor for decades. I don't know where you are on your investing journey, but I know someone or something in the world of successful long-time investing holds great promise for you. And I believe that StockCentral can be the door to that which you seek or that which you wish to share. If you're relatively new to investing, Welcome. We'll cover some basics over the next few days and introduce some concepts and extraordinary people that will increase your opportunity for success. If you've followed some basic tenets of successful long-term investing for years or decades, you are equally Welcome here. Everyone is a miracle in their own way. I believe our community of long-term investors has the challenge, opportunity and promise to celebrate differences and build successful investing experiences. We have so much more in common and we share the same visions and objectives. Like few other communities that I have ever encountered, the citizens here genuinely care about making investing easier, conquering doubt and fear, and making long-term successful investing a reality for as many people as possible. In my remarks on Friday, I mentioned that we needed to celebrate a group of DOGs. One of the things that so many of us have in common is that we've discovered, studied and implemented the works of one George Nicholson, a visionary educator who believed completely that investing success is something that anyone can achieve. I've often wondered how so many dog lovers could tolerate labels directed at the "dogs of our portfolios." The label is most often reserved for poorly-performing holdings. As a dog lover, I've always thought that our portfolio dogs should be those with which we'd associate long-term reliability and good results. We expect -- and generally experience -- nothing less from most of man's best friends. Nicholson was a champion of investment clubs as opportunities for support and learning in groups, a means of sharing ideas, and an approach to pool resources and reduce costs. Nicholson encouraged discipline and patience in investing. He reminded us that we should invest regularly in leadership companies and that we should seek prudent diversification. If these words are new to you, Welcome. If they're not -- and for many of you they aren't -- then welcome to the pack. We could be characterized as "disciples of George" -- DOGs, if you will -- it's the strongest common attribute of the investing citizens that you'll encounter here at StockCentral. All of the tools and all of the resources and all of the discussions boil down to some fairly simple and powerful characteristics for any stock that we study. We analyze the track record and build an expectation for where the company will be five years from now. How has the company grown? What are the prospects for continuing growth? How profitable? What does the profitability trend tell us about the outlook going forward? How effective has management been in pursuing growth while achieving superior profitability? Our studies of growth and profitability lead us down a path to establishing a value for the company. Based on today's stock price, what type of returns may we expect from the company? This is the common ground that is shared by all that we will cover. At Manifest Investing, we believe that the results of any stock study deliver the two most important characteristics of any investment: (1) Quality and, (2) Forecasted Returns. George Nicholson's guidance is time-honored and a road map to a successful journey. Invest (assume ownership) in the best companies with excellent management. Remain invested in them so long as it makes sense to do so. Your pride of ownership should include remaining vigilant about successes, challenges and trends. Discover these leadership companies and buy them -- or accumulate them -- only when it makes sense to do so. Do this only when they're "on sale." This is essential to achieving superior returns and the failure to do "this" is the most common mistake made by all investors. Patience and discipline are necessary. We know that "Stock prices fluctuate." The fluctuations deliver opportunities to buy and sell while building and maintaining our portfolios. In the next session, we'll start the Discovery process -- a search for candidates to study and attempt to put some of George's lessons to work for us. If you're a long-time DOG, feel free to howl a little. If all of this is new to you, Welcome. Mark Robertson Founder, ManifestInvesting.com This is intended to be an educational demonstration of investing methods, tools and resources for/by community participants at StockCentral. ABSOLUTELY NO INVESTMENT RECOMMENDATION IS INTENDED. This discussion will explore the underlying concepts of forecasting sales growth, profitability and valuation that are used to form projected annual returns and quality ratings, etc. If you are math phobic or new to investing, relax. Take it at your own pace and the important concepts will become clearer over time. Questions or comments? Hit reply and ask or share right here.

Mark Robertson
Rochester Hills, Michigan
www.manifestinvesting.com

12/05/2006 2:25 PM
Discovery Meets Sleep-At-Night Investing What does all of this have to do with sleep-at-night investing? I think it comes down to investing in companies with consistent, leadership track records. When I first started exploring investing back in the 1980s, I dabbled with newsletters, hot stock tips, mutual funds, technical analysis and even a foray into neural networks for investing. Yes, neural networks. Then one morning an article in the Wall Street Journal caught my attention. It shared and explained the experiences of a group of investment clubs that had trounced the Wall Street averages during 1992 with a handful of stable, long-time solid performers like McDonald's, Wal-Mart and Abbott Labs. The idea is simple. Discover a high-quality company and only buy it when it's on sale. Assume ownership. Own it until it no longer makes sense to do so. The average holding period of these "investment clubs" was greater than five years at the time. I can still remember making a presentation before a chapter of the American Association of Individual Investors and describing a successful portfolio that hadn't sold a stock in 2-3 years! I may have imagined it -- but I think a few of them were ready to chase me with torches and pitchforks. I know some "investors" who couldn't sleep through the weekend if they held their stocks past Friday afternoon. I used to have lunch with the Investment Analyst Society of Chicago and often found myself seated with a group fidgeting in their seats as they literally worried about what was happening to their stocks during lunch! They may have been professional money managers, but in my opinion, they weren't investors. We sleep at night, soundly, because of the long-term stability of high-quality companies with excellent management. At Manifest Investing, we rank nearly 2800 companies from 0-to-100 on the basis of financial strength, earnings predictability and relative comparisons (versus competitors or peers) of sales growth and profitability forecasts. These four factors form this 0-to-100 quality rating. For more details on the calculation and origins of the quality rating, see: Quality: Excellence Measured The top 20% of all companies have a quality rating greater than 65. Some of the highest quality scores are from companies like: Abbott Labs (85.2), Coach (88.5), Coca-Cola (85.7), Fastenal (87.7), Illinois Tool Works (85.5), Pepsi (89.0) and Walgreen (86.3). Discovering Current Candidates for Further Study There are many places you can turn for screening resources -- our effort to reduce a universe of thousands of stocks to a smaller group worth a closer look. ICLUBcentral produces a software tool known as Prospector. You can find discussions and more information about Prospector on this Forum. Other screening resources include msn.com, Reuters, Yahoo and Morningstar. They're all good -- and this is particularly true if you're comfortable writing query strings. Personally, I don't think most of us want to dabble in programming when we sit down to discover stocks. We built the StockSearch function at ManifestInvesting.com based on that simple premise. We want to rapidly discover a short list of qualified candidates. And the StockSearch is unique in that we can search for companies using projected returns and quality ratings as our primary target. Here's a screen capture from the StockSearch feature at ManifestInvesting.com: We're searching for a stock with excellent quality (>65), a projected annual return (PAR) that's high but not too high (14.5-20%), a financial strength rating of A++/A+/A, double digit forecasted sales growth and EPS Stability among the top 20% of all companies covered by MANIFEST. An EPS Stability rating of 80 or more insures that we'll probably be looking at reasonably straight EPS trend lines. And here are the results of those inputs: Growth: Forecasted long-term sales growth. P/E Avg: Projected average P/E in 3-5 years. Fin Str: Financial Strength (A++=100, A+=90, A=80) EPS Pred: Volatility of year/year EPS growth for the past 5-7 years and forecasted EPS for the next two years. Proj Yield: Projected dividend yield (%). Projected Ann Ret: The projected annual return (or PAR) based on trailing twelve month sales -- the sales growth forecast shown, an assumed net margin (not shown), the projected P/E shown and a shares outstanding forecast. Quality: MANIFEST rating based on financial strength, EPS Stability and relative projected sales growth and profitability. And now ... the Diligence. For purposes of demonstrating more tools and resources at StockCentral and beyond, we'll turn our attention to Walgreen (WAG) with its PAR of 19.4% and quality rating of 86.3 (Excellent.) Mark Robertson ManifestInvesting.com

carole canfield

12/05/2006 5:15 PM
Loved the workshop. I am lookinging forward to more straight thinking and investing advice. Carole Canfield

Laura Scott
Florida

12/05/2006 5:21 PM
Me too Carole! I can't wait to start "sleeping at night".......Just kiddin....I sleep just fine at night with my investments, but there's always more to learn and I am looking forward to learning from Mark and others. Thanks Mark for doing these workshops. Laura

Danny Matthews

12/05/2006 5:41 PM
Our Club owns BBBY, MSFT and has WAG on the watchlist. I've been trying to sell them on FAST for some time now but to no avail. Just going to have to keep digging into the "nuts and bolts" of the companys strengths. (Sorry pun intended). I personally own PAYX and that has performed well in the past and I hope for the future. The previously mentioned list looks to have some high quality candidates as Mark stated. Carry on... This akin to the eatwell vs sleepwell mentality

Danny Matthews Tuscola IL

Joe Craig
Ellicott City, MD
StockCentral Administrator

12/05/2006 6:48 PM
>Loved the workshop. >I am lookinging forward to more straight thinking and investing advice. Stick with us, because the workshop isn't over! Mark will be attending to this topic all week. And ... you can continue the conversation even longer. An aside: we're planning to have workshops at least monthly.

Joe

Pamela Pontius

12/05/2006 11:48 PM
Thank you for introducing us to your new site. Mark's workshop is timely as I try to focus on reviewing my portfolio during this busy time of year! Great info, keep it coming...

JIM CATANZARO

12/05/2006 11:59 PM
I never knew Mark could carry a tune.. See ya in Chicago this weekend at the TSO show :)

Mark Robertson
Rochester Hills, Michigan
www.manifestinvesting.com

12/06/2006 8:59 AM
Jimcat, you would have loved "I couldn't sleep at all last night..." from the podium at a Puget Sound investor fair a few years ago. But can he dance? Just ask that law enforcement officer in Defiance, Ohio who put a speed bump in my trip while I was on my way to see you and the NE Ohio folks. Seasons greetings to the Cat clan, Mark Robertson http://www.manifestinvesting.com

Kurt Kowitz
Troy, MI
www.manifestinvesting.com

12/06/2006 11:29 AM
Posted By Danny Matthews on 12/05/2006 5:41 PM >I've been trying to sell them on FAST for some time now but to no avail. Just going to have to keep digging into the "nuts and bolts" of the companys strengths ... Danny: The December issue of Expected Returns at Manifest Investing featured Fastenal. I've published a free version of the article at Manifest Investing. Maybe we can help sell them on the nuts and bolts. :) Kurt Kowitz Manifest Investing

Mark Robertson
Rochester Hills, Michigan
www.manifestinvesting.com

12/06/2006 4:26 PM
Giving Diligence Its Due Before we launch into a closer look at yesterday's "discovery" of Walgreen, let's spend a moment reminding and reinforcing a few realities. Stock prices fluctuate. "Every investor who owns common stocks must expect to see them fluctuate in value over the years. Investors should neither be concerned by sizable declines nor become excited by sizable advances. Stock prices are a convenience, either to be taken advantage of or ignored." -- Benjamin Graham "I buy stocks as if the stock markets are going to be closed for the next five years." -- Warren Buffett Stock prices fluctuate. I'm glad that Warren Buffett and the long-term investors who gather here at StockCentral are on the same page of the playbook. Because we basically are emulating his approach when we study and prepare our understanding and expectations for what the next five years may hold for every company that we study ... or those we own as parts of our portfolios. We are vigilant about the 5-year time horizon in front of each of our favorite companies. George Nicholson's development of the NAIC Stock Selection Guide (SSG) was based on these core concepts. That is, take the track record of a company and build considered forecasts for the key investment characteristics going forward. Many, if not most, fundamental investors and academics attempt to calculate a reasonable current price based on what they call a discounted cash flow. An example of this approach can be found at www.morningstar.com. In other words, a comparison is made between the listed stock price and the "inherent" value -- based on the underlying fundamentals. We do precisely the same thing in reverse. We calculate a projected return based on the current price and our forecasted price. Our return expectations are formed from the combination of annualized price appreciation and projected dividend yield. The concepts behind the SSG are at the core of any stock study making the SSG one of my favorite tools for diligence and discipline. According to Nicholson, " ... the analysis of growth (and potential returns) depends on the reality that management determines long-term growth. This is manifested in three areas: (1) sales growth rate, (2) profit margin trends and (3) return on capital." Fuel for Our Stock Studies The historical data that we need for a review of Walgreen is available at: StockCentral Enter the ticker symbol (WAG) and you'll see a company report with a profile of the important data. StockCentral is also a path to some software tools that use the data for stock studies. My personal favorite is Toolkit for stock studies. This is powerful desktop software that can be used to complete SSGs. One of the best features is that we access to Ellis Traub, the developer and respected long-time investment educator, here at the StockCentral forums. If you are partial to online tools, you can also explore Stockfundas.com -- another path to SSG-based stock studies. Stockfundas principal Rajiv Roy is also participating as a StockCentral affiliate/partner. In the next post, we'll take a closer look at the key pieces of a Walgreen stock study. Mark Robertson Founder, ManifestInvesting.com

Steven Sathue

12/06/2006 4:35 PM
My short list of potential purchases includes both FAST (Fastenal) and PAYX (Paychex), both being high quality companies - as highlighted in the Manifest dashboard in this message thread. While this may not be (or maybe is?) the correct place to pose this question, I would love to peek inside the minds and thought processes of more seasoned investors if they were in a position to have to choose between FAST and PAYX for a portfolio addition, assuming the portfolio contains neither already (and assuming non-infinite funds!). Is this excercise of interest? -Steve p.s. BTW "ManifestInvesting" is fabulous and I recommend that everyone Run (Don't Walk) the the www.manifestinvesting.com site and sign up ASAP, esp. given the $10 off special (code: HOLIDAY06). I have received no compensation for my endorsement! :-)

Carol Clemens
Edmond, Oklahoma

12/06/2006 6:03 PM
Mark-- In the screening tool you used to derive your list for this discussion, did you or didn't you include yield? Dividend growth is becoming more of a consideration for me as retirment is imminent. Couldn't tell from your summary. Am delighted to see you here at this forum! Carol Clemens

Carol Clemens

Mark Robertson
Rochester Hills, Michigan
www.manifestinvesting.com

12/06/2006 6:14 PM
>Steve Sathue said: "My short list of potential purchases includes both FAST (Fastenal) and PAYX (Paychex), both being high quality companies - as highlighted in the Manifest dashboard in this message thread. While this may not be (or maybe is?) the correct place to pose this question, I would love to peek inside the minds and thought processes of more seasoned investors if they were in a position to have to choose between FAST and PAYX for a portfolio addition, assuming the portfolio contains neither already (and assuming non-infinite funds!). Is this exercise of interest? The reference Steve makes is to the screening results shown during our Discovery efforts. Of course this is the right place to post questions ... and I (like you) am always eager for input from this community of investors. This is part of implementation -- and we'll cover this in greater detail later -- but the issue/topic is a beautiful one from where I sit. You're drawing attention to the notion that buying (or selling) a stock should no longer be based, virtually completely, on the outlook or results of a stock study. Instead, any such decision should be portfolio-centered. The question should be framed, "If I buy Fastenal (or Paychex) and add it to this specific portfolio, how does it favorably effect the portfolio as a whole?" We'll also cover dashboards (i.e. portfolio summaries) later, but one of the features we provide at MANIFEST is that dashboards can be shared amongst club partners or family members by making them "public." For purposes of discussion, let's assume that you have a candidate portfolio like the one at: www.manifestinvesting.com/dashboard/5350 We see that the overall portfolio PAR is 11.4% (Before) with a quality rating of 76.2. (This is a strong quality rating and either stock will enhance the overall portfolio quality.) With the median PAR for all 2700+ stocks covered at MANIFEST (MIPAR) at 9.5%, we'd (1) like to boost the overall portfolio PAR a bit higher and (2) we want to maintain high quality levels when MIPAR is at/near historical lows. The multi-decade range has been 8-20%, roughly. 125 shares of FAST would boost the portfolio PAR to 12.2%. (After) 125 shares of PAYX would boost the portfolio PAR to 12.3%. (After) Both are headed in the right direction. They're both excellent companies. But a caveat -- that PAR for Paychex is based on a projected average P/E of 38x while a similar return is projected for Fastenal at a future P/E of 27x. I tend to look on that P/E of 38x for Paychex as a high jumper looks at a bar set at a height approaching a new world record. In a tiebreaker, I'd lean towards Fastenal. How does either stock "fit" within the portfolio? PAYX is technology. FAST is consumer discretionary. These are the types of consideration that any such decision takes on when it becomes portfolio-centered. Thanks for the question, Steve. And now back to some over-the-counter diligence on Walgreen ... Mark Robertson Founder, www.manifestinvesting.com

Leonie Sauer

12/06/2006 7:30 PM
Hi MArk, I like the rail road tracks on the front of WAG's SSG. While it looks as if I picked the right numbers for future sales & earnings, I question those two numbers. Looking at the PERT-A graph the pre-tax profit line is just about straight across the graph at roughly 5+ %. Also, I don't like WAG's high numbers in both high & low PEs. PAYX is another stock with such high PE's. I own stocks in both companies. I sent a copy of my WAG SSG to StockCentral. I lowered my expectations for the PE's considerably. What would be a possible outcome if my PE numbers were to be correct in the future? I do not intend to lose any money on my investment in WAG, Love this discussion. Léonie Sauer herisau@comcast.net

Kurt Kowitz
Troy, MI
www.manifestinvesting.com

12/07/2006 10:31 AM
Posted By Steven Sathue on 12/06/2006 4:35 PM: p.s. BTW "ManifestInvesting" is fabulous and I recommend that everyone Run (Don't Walk) to the www.manifestinvesting.com site and sign up ASAP, esp. given the $10 off special (code: HOLIDAY06). I have received no compensation for my endorsement! :-) Steven: Thanks for letting this cat out of the bag. The HOLIDAY06 coupon code, $10 off plus an additional 3 months on annual subscriptions or renewals, will be available through the end of 2006. Create a free 30 day trial account at Manifest Investing and we'll be sure to provide details in the coming weeks through the web site and on our weekend update email. Kurt Kowitz Manifest Investing

Mark Robertson
Rochester Hills, Michigan
www.manifestinvesting.com

12/07/2006 1:20 PM
>In the screening tool you used to derive your list for this discussion, did you or didn't you include yield? Dividend growth is becoming more of a consideration for me as retirment is imminent. Couldn't tell from your summary. Am delighted to see you here at this forum! Carol, No I didn't included dividend yield in the screen here. For most of my studies, dividend yield is a secondary consideration and that's clearly a personal situation -- as you have emphasized here. If I were dealing with a mature portfolio or seeking to protect capital and build an income stream, then dividend yield can become a primary consideration -- which is why we provide for it at ManifestInvesting.com. Thanks for the kind words! Good to "see" you, too. I'm looking forward to visiting Oklahoma on February 17, 2007. Best regards, Mark Robertson - www.manifestinvesting.com

Mark Robertson
Rochester Hills, Michigan
www.manifestinvesting.com

12/07/2006 3:02 PM
Leonie said : "I like the rail road tracks on the front of WAG's SSG. While it looks as if I picked the right numbers for future sales & earnings, I question those two numbers. ...the pre-tax profit trend is [pretty steady] at roughly 5+ %. Also, I don't like WAG's high numbers in both high & low PEs. PAYX is another stock with such high PE's. I own stocks in both companies. I sent a copy of my WAG SSG to StockCentral. I lowered my expectations for the PE's considerably. What would be a possible outcome if my PE numbers were to be correct in the future? I do not intend to lose any money on my investment in WAG... Thanks for the kind words, Leonie and this takes us right into the next session. We'll wrap our first cut at diligence on Walgreen by taking a look at a NAIC Stock Selection Guide, or SSG. When Diligence Meets Railroad Tracks For those of you new to this, we're going to take a look at the Walgreen track record and focus on historical sales and profits as we begin to build our expectations for what the future may hold for the company. And Leonie has jumped the gun by pointing out that we see "railroad tracks" for Walgreen. This is a reference to straight, upward-sloping lines in the Visual Analysis segment of the SSG. Here is what the 10-year track record of Sales (green line), Pre-Tax Profits (red line) and Earnings Per Share (blue line) look like for Walgreen: These are some serious straight lines. Leonie is pleased because this makes forecasting much easier and probably, much more reliable. In the company report from Value Line on Walgreen, we see that it has an EPS predictability of 100. It doesn't get any better than that as this rating ranges from 5-to-100, where 5 would be a company imitating the bumpiest roller coaster you've ever seen. It's not the purpose of this workshop to explore the details of studying a stock and completing a Stock Selection Guide, so I'll share the assumptions that I'm currently using for Walgreen that have an impact on the study results. For those of you new to this, I'd recommend that you explore www.betterinvesting.org. Create an account and explore. If you do create or have an account there, spend some quality time with the teachings of Nancy Isaacs. Nancy is a gifted teacher and she's already asked and sought/shared answers to all of the questions you haven't even thought of, yet. Her article, "Putting the SSG to Work" (July 2001) is particularly good -- but they're all good. Enjoy them. Walgreen -- The Fundamentals Value Line expects sales to grow from $47,390 million at year-end 2006 to $78,500 in 2010, an annualized growth rate of 13.4%. www.morningstar.com covers stocks and their sales growth forecast for WAG is for "sales to increase 12% in 2007 and then increase 11% annually over the next five years." Hmmm. Slightly lower expectations. I grab the S&P report from my research reports available at E*Trade for a closer look. S&P sees "sales advancing about 11%..." and discusses store growth and "improved traffic trends and convenience levels as operating hours expand, etc." I choose 12% as my sales growth forecast. Leonie is right. The profitability trend is something we can set our watches to. The following graphic is the pre-tax profit trend for Walgreen: The Value Line analyst is forecasting a 4.3% after-tax profit margin -- which is equivalent to a 6.9% pre-tax profit margin. Hmmm. Perhaps the VL analyst (Andre Costanza) has reasons to believe this will materialize for reasons such as higher prices, better product mix, etc. But I don't expect the competition from CVS and Wal-Mart and Target to take a breather any time soon. If anything, I'd expect maintaining that 5.8% level to be challenge. But, I'll use 5.8% pre-tax margin for my study. Value Line is forecasting 1000.0 million outstanding shares in their long-term forecast. I check their long-term forecast for net income ($3375 million) and divide it by their long-term EPS forecast ($3.35) to check this figure. The result: 1007.5. Close enough. For the final piece of the future price puzzle, we need a projected P/E. Value Line is projecting an average P/E of 26.5x for Walgreen. What does Morningstar think is a fair P/E? Their current "fair value" is $51. With current EPS of $1.77, the Morningstar P/E is 29x or so. I'll stick with 26.5x for an average P/E and 31.5x and 21.5x for my high and low P/E forecasts. The results of these core fundamental assumptions: Sales Growth Forecast = 12% Pre-Tax Profit Margin Forecast = 5.8% (Net Margin = 3.6%) Projected Average P/E = 26.5x ... is a long-term EPS forecast of $3.08 and a future projected average price of $82 and a projected annual return (PAR) of 13.8%. The quality is excellent based on the steady growth and consistency of profits. MANIFEST scores WAG at 86.3, an EXCELLENT quality rating that would rank in the top 1% of all companies. As Leonie suggested, community participants here post their SSG files and I've done so as an attachment. Leonie, none of us want to lose any money on Walgreen, but the outlook looks pretty favorable so far. The 600-lb gorilla named Wal-Mart has been shaking the Walgreen cage lately and we'll want to see what others think about that. Join us in the next session as we see what's on the mind of some key community participants here at StockCentral. Mark Robertson www.manifestinvesting.com
Attachment: WAG.SSG

Joe Craig
Ellicott City, MD
StockCentral Administrator

12/07/2006 4:09 PM

This is a very nice discussion, Mark ... as usual ...

I thought that I'd take a look at WAG with Take Stock. Take Stock's summary is as follows:

Ticker	Company Name	Price	Buy Price	Quality Index	Mood Indicator
WAG	Walgreen Co.	43.66	47.21	5.30	COLD

Summary
If you're satisfied with the growth and/or efficiency issues, Walgreen Co. might be a buy at 43.66

Reasons to Buy

Sales growth is very predictable.
Earnings growth is very predictable.
Profit margins are trending up or are steady.
Return on Equity is strong.
43.66 is a reasonable price for this stock.
Total return is 16.70%

Items to Check

Sales have grown historically at 12.34%.
Earnings have grown historically at 13.16%.
Recent sales growth has been 12.40%.
Recent earnings growth has been 13.00%.
Investor interest has cooled. There may be a valid reason.

At 0.12%, the Risk Index shows the risk to be too great.

These results are quite similar to yours. That's not surprising, given those railroad tracks!

Joe

Danny Matthews

12/07/2006 10:16 PM
For those with Roth accounts reinvesting dividends without a tax consequence is a beautiful thing! That's where you really see compounding at it's best.

Danny Matthews Tuscola IL

Rajiv Roy

12/08/2006 6:46 AM
I uploaded Mark's SSG to stockfundas.com Here is the analysis on stockfundas.com http://www.stockfundas.com/home.aspx?cmd=cmdRcvTckAnl&frmUsrId=3&tckId=8664 Since the prices used in stockfundas are real-time, they will not match Mark's analysis exactly but here goes: High PE : 26.5 5yr High EPS : $3.08 Estimated Low price: $32 At a current as of Dec 7th price of 43.24 U/D : 3.41 to 1 Projected Annual Apprectiation : 14%

Rajiv www.stockfundas.com

Mark Robertson
Rochester Hills, Michigan
www.manifestinvesting.com

12/08/2006 9:33 AM
Time for an I-told-you-so, everybody. When I said people like Rajiv Roy of Stockfundas.com would be "hanging out" here -- I was serious. Thanks, Rajiv -- for the link and demonstration of the Stockfundas alternative for stock studies. Mark Robertson ManifestInvesting.com ... making long-term investing easier.

armin fields

12/08/2006 7:34 PM
Thanks once again for all the hard work and excellent education. Here are a few questions: - Your SSG for WAG projected Hi and Lo PEs of 31.5 and 21.5. How did you determine those numbers and is that how you usually determine projected Hi and Lo PEs? - I know that 31.5 + 21.5 / 2 = 26.5 which is VL’s projected PE. But what method did you use to derive 31.5 and 21.5? - You accept VL’s projected PE of 26.5, but do not accept VL’s projected Sales growth of 13.4%. Instead, you used 12.0%. Why do you think VL’s projected rate for sales is too high, but not its projected PE? - You note that VL’s Earnings Predictability is 100% and say “It doesn't get any better than that”. Soooo, why didn’t you use VL’s projected EPS of 17.0% instead of 12.4%? - How come your projected Hi PE 31.5 becomes, at StockFundas, 26.5? Armin Fields (still in San Diego and still wearing shorts...it's like summer here)

Armin Fields check out my SSG blog at http://arminfields.wordpress.com

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