Tear Sheet July 2016

July 2016
Tear Sheet July 2016
Morningstar & Technical Guidance
Publishers Commentary: July 1, 2016
Morningstar Sector Fair Market Valuation;

Margin of Safety
Page 11
GDP forecast is not very dire
Page 2
More market rollercoaster rides, please. Page 2

RBCs recent commentary seem to indicate a
neutral stance.
Page 3
Interest rates will be going up, just a little later
than thought.
Page 3
Pouting Pundits of Pessimism.
Page 4
Look South for Big Trouble, Not Across the Pond.

Page 4
Cash is King-er, but also a contrarian buy signal.
Page 5
Wage growth for Job Switchers is the highest in
10 years.
Page 6
The most recent communiqu from First Trust
Advisors puts a positive spin on our economic
environment.
Page 6
Goldman issued their latest opinion of a pullback
that will lead to a buying opportunity.
Page 8
Recommendation and list changes.
Page 8
Guiding Mast Stock Rankings

Full Speed Ahead and Power Up;
Stocks Moving Up and Down in Ranking. Page 9
High Ranking Stocks by Sector;
Value and High Quality Market Plays
Moving Averages and P&F Charts
Page 12
Laymans Interpretation.
Page 13
Best Stocks of the Month

Johnson Controls: From Hoover Ball Bearing to
Tycos Rolodex of 3 Million Clients. JCI is a midcap industrial firm offering steady growth at a
fair market valuation.
Page 15
Stock Ideas off the Radar Screen:
Spectra Energy Partners: Low risk natural gas
pipeline MLP.
Page 17
Notes from the Top

Harley Davidson (HOG) buyout target?.. United
Healthcare (UNH) retains its financial quality
rating.GATX (GMT) is changing its ticker
symbol.... Shire Pharmaceutical (SHPG) complete
its purchase of Baxalta..Mercer Intl is headed
for a troubled 2016 but a vastly improving
2017..Cognizant Technology (CTSH) is well-liked
across Wall Street.. Flextronics (FLEX) gets some
love from major credit agency.
Page 19
Strategic Subject of the Month

What is the Forward PEG Ratio and Why Should
I Care? One of the most basic stock fundamental
analysis ratios is called the PEG ratio
Page 23
About Us
Page 10
Subscriptions, How to Use Your Newsletter Page 24
1 Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com
We Help You Better Manage Your Money
2016
Publishers Commentary July 2016

Guiding Mast Investments
Commentary: July 1, 2016
The American Republic will endure until the day
Congress discovers that it can bribe the public
with the public's money. Alexis de Tocqueville
In a nutshell: Wow A great V move: risk on,
then off, then on again, all within a week; the US
economy continues to expand, and current
quarter growth seems to be improving; the stock
market is in surprisingly encouraging territory,
the trend is optimistic and should still be
considered mildly positive, but dont tell the
perma-bears that.
exception of Jan and Feb of this year. This is the

main reason about 50% of our top 30 stocks are
in the financial sector its where the long-term
value lies.
Stock prices are up a miserly 2.9% year to date
and 1.2% year over year.
GDP forecast is not very dire. As a matter of fact,
it is an uptick from the first qtr. The latest
GDPNow forecast from the Atlanta Federal
reserve anticipates a 2.6% growth in the US
economy during the just completed 2nd qtr.
This is the second month running with a

Neutral reading trend from Point and Figure
charts.
The Brexit vote added uncertainty and markets
hate uncertainty. Uncertainty moves investors
from a risk-supportive mentality to a risk-adverse
mentality, and is evident in the strength of
defensive stocks such as utilities and consumer
staples, and weakness in economic sensitive
sectors, such as financials and consumer cyclicals.
The momentary strength of the US Dollar in the
global flight to safety caused a dip in the relative
value of foreign stocks. If the world does not
come to a crashing end, the US Dollar should
weaken from its current heighted levels, making
US investors foreign stock holdings worth more.
Our Neighbors to the North, Canada, should be
considered as prime participants to this trend.
Over the past two years, financial stocks have not
been this cheap on relative valuations with the
The Atlanta Fed has been consistent in their

short-term forecasting tool, and this strength will
show up in stronger US profits for companies
focused on domestic market needs.
More market rollercoaster rides, please.
Volatility should rise in the coming year. Since
1945, the number of days in which the S&P 500
rose or fell by 1% or more averaged 85 days in
year eight of bull markets versus 65 in year seven.
Keep those seatbelts tight around your waist and
dont panic in the ensuing dips.
Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com 2016

RBCs recent commentary seem to indicate a
neutral stance, with a preference for dividend
and income stocks. This mirrors our stance as
well. Still Working. The higher-yielding stocks
have been some of the best performers in the
market this year for several reasons, and this has
caused many investors to question just how high
they may go, and many are considering taking
profits in this strong sector. At this time we see no
evidence that the rewarding strategy of investing
in the dividend stocks is changing, but do believe
that the upside potential from here could be
limited. We believe that the decline in interest
rates will level off for the next few months, and so
could the rising trend of the higher-yielding
stocks. We regard most of the sector as good
holds here, and likely to remain so going forward.
Eventually, the market could start to favor the
more volatile growth stocks, but that kind of shift
can take many months to develop, and as long as
the fundamental outlook remains highly
uncertain, we think owning the dividend payers
will likely remain a winning strategy.
suggest RSP support in the $81.50 range, with a

current price of $85 and a yield of 3.2%.
Interest rates will be going up, just a little later
than thought. So, lower longer may become an
effective slogan, but the longer is the most
questionable part. Below is the most recent RBC
average rate forecast for 10-yr Treasuries, along
with consensus Bloomberg estimates, as of first
of July.
RBC
Bloomberg
Current
Bloomberg
Prior
2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017

2.00% 2.20% 2.45% 2.55% 2.85% 3.05%
1.83%
2.00%
2.11%
2.30%
2.40%
2.50%
1.90%
2.06%
2.20%
2.35%
2.47%
2.61%
Source: rbc.com
Dont let the current spike lower in rates deter
you from proper risk analysis of bond mutual
fund positions.
Current rates are 1.46%.
Reviewing the 10-yr Treasury yield 5-yr chart,
rates have not been this low since July 9, 2012.
RBC offers the following chart for share price

performance of iShares Dividend stocks ETF DVY:
Source cnbc.com
Share prices broke out of their Jan 2015 to March

2016 trading range. Current trends seems to
3
In the wake of the Brexit vote, most analysts and

investors have been forced to sharply lower
interest rates forecasts. However, it is critical to
appreciate the decline is not due to any
significant change in the underlying US economic
outlook, but rather to a series of powerful
technical factors that should keep US yields
compressed.

As uncertainty in the EU translates into a lower
global appetite for risk investments such as
stocks, the pressure will continue to be on
owning safe and secure US Treasuries, keeping
the lid on the economic underpinning for higher
rates. Rate will more higher, and the lingering
question remains: When and By How Much.
First Trust Advisors: Pouting Pundits of
Pessimism. The votes have been counted and it's
"See EU Later" for the UK. As we wrote two weeks
back, Brexit is Freedom, and our view hasn't
changed.
Short term, the markets will be volatile.
Currencies will rise and fall. To us, this looks like a
buying opportunity.
When the Shanghai Composite plummeted back
in late August 2015, the Dow fell almost 800
points and oil prices dropped 5.5% in a span of
just two days on fears that the world's second
largest economy was headed for collapse. But
before the end of that week, the markets had
made it all back (and then some) while oil ticked
higher. It was yesterday's news almost as quickly
as it appeared.
and to geopolitical analysts in generalthat the

Western public is so unequivocally uninterested in
Latin America. The imagination is instead only
captured by jihadist movements that happen
much, much further away, or by the Russian
bear, which has not failed to tantalize and thrill
for decades. But when major events are
happening much closer to home, it fails to
captivate.
From a global economic and geopolitical
perspective, you should be very concerned about
what comes next in Brazil. But again, if there is no
blood, no beheading, no pseudo-religious angle
major world developments fall on deaf ears. Lets
change that: Washington certainly haseven if
its not obvious to you from media coverage.
Nonetheless, this is our new strategic front line,
and its not just about Brazilplease pay
attention to whats going on in Venezuela, as
well. And it has as much to do with China as
anything else.
Now the pouting pundits of pessimism are once

again crying that the sky is falling. It was an
overreaction then and we think it's the same
thing now.
Look South for Big Trouble, Not Across the Pond.
Investors should be most interested in the spider
webs from Brazil to China and from Venezuela to
China. From a report recently issued by JP
Morgan: Brazil and Venezuela: If you arent
interested in whats going there, you should be.
Its fascinating to the private intelligence world
4
Newly Opened Panama Canal Expansion

China is Brazils biggest trading partner, and its
doubly important that this is in the U.S. back
yard. What Washington definitely doesnt want

happening is China fully and irrevocably
connecting up with South America, and the only
way to ensure that does not happen is to make
sure that Brazil (among others, but this is the
lynchpin for now) is taken down a notch politically
and regionally.
But for the immediate term, if youre an oil
watcher or investorBrazil should be furiously
pinging your radar. Its not necessary to follow
every step in the Petrobras scandalwhich the
public has already made clear its not interested
inbut you might want to take a closer look at
the ongoing efforts to impeach the president.
In the words of geopolitical
extraordinaire, Pepe Escobar:
analyst
So every coup is now literally allowed in South

America; indirect attacks to the Brazilian
currency, the real; bribing local comprador elites
with the backing of the global financial system; a
concerted
attempt
at
the
implosion,
simultaneously, of the top three economies:
Brazil, Argentina and Venezuela. SOUTHCOM
went so far as to produce a report on Venezuela
Freedom earlier this year, signed by commander
Kurt Tidd, which proposes a strategy of tension,
complete with encirclement and suffocation
techniques and allowing to mix street action with
a calculated use of armed violence. Echoes of
Chile 1973 do apply.
The final ruling on the impeachment of Brazilian
President Dilma Rousseff is probably going to be
in mid-August. The coup plotters arent faring
well, though, and the game is now anyones. They
are implicated in scandal as well, and the tides
are now shifting. August will determine what
happens next in Brazil and it will have global

political and economic repercussions.
China and Panama just celebrated the much
heralded reopening of the Panama Canal. The
$5.6 billion project added a third shipping lane
which is wider and deeper. This expansion not
only increases the number of ships that can pass
through the Canal complex but their size as well.
This is an important consideration in the transshipping of Chinese goods to the Atlantic coast of
South America and the shipping of oil and natural
resources from these same areas back to China.
It is important for US investors to remain aware
of developments within this region as they could
have far more reaching impact than the current
commotion in the European Community.
Cash is King-er, but also a contrarian buy signal.

Mutual fund manager cash levels are averaging
5.7%, according to the monthly Merrill Lynchs
fund manager survey. That's up from 5.5% in
May, and the highest reading since November
2001. Could these fund managers be anticipating
a downturn in stocks or a recession?

Not necessarily, as the rise in cash levels comes
with managers' reported expectations for global
economic growth and corporate profits - both of
which are at six-month highs. Instead, Merrill
Lynch suggests the move to cash likely reflects
some fears about short-term volatility
surrounding Brexit vote. As for the most overcrowded trade, Merrill Lynch postulates it's
naturally long positions in developed market
government paper. aka US Treasuries.
Interestingly, when fund managers put more
than 4.5% of their holdings in cash, as has been
the case for some time, it creates a contrarian
buy signal, the Merrill Lynch researchers
contend. The research arms of other big banks
are singing a similar tune: BNP Paribass
sentiment indicator is also suggesting a
contrarian buy signal.
While cash has not been King-er since 2001, look
to buy stocks on dips with the contrarian belief
that the world is not ending anytime soon.
Wage growth for Job Switchers is the highest in
10 years. The following Federal Reserve of
Atlanta chart of wage growth offers an
interesting view of recent history. Going back 20
years and 2 recessions, the chart shows the
percentage increase in wages for employees who
switch jobs (i.e.: new employees) and those who
stay on their current job.
Source: Federal Reserve Bank of Atlanta

As shown, over the past few years, wage growth
has steadily increased, but still lags growth seen
in the 1996 to 2007 era. In addition, the decline
from 5% Stayers growth in 2001 to its trough of
just over 3% in 2004 is minor to the more severe
decline following the 2008 recession from 4% to
almost 1% in 2010.
This again shows an improving consumer base of
wage growth, but still in an anemic range
supporting more Plow Horse economy
comparisons.
The most recent communiqu from First Trust
Advisors puts a positive spin on our economic
environment. We wish we had a dime for every
recession forecast we've heard in the past seven
years. Like someone with hypochondria, fearful
forecasters feel economic doom and gloom is
right around the corner after every dip in
economic data or shift in economic policy.
The most recent signs of apocalypse were a
weaker than expected US jobs report for May,

and then, last week the UK voting to exit the EU.
Never mind that neither of these events signals
imminent recession. Job data have been weak
many times before and, at the risk beating a dead
horse, actually showed a big fat zero for the
month of August 2011. Following that report,
recession forecasts proliferated...wrongly.
And, "Brexit"? People keep talking about how it
will cause a global recession and, for the life of us,
we can't find a single mechanism for this to
happen. Yes, it might/may/could lead to higher
tariffs for trade with the UK. But this represents
such a small portion of total world trade, we are
at a loss for how this could cause a global
recession.
The nationalist tendencies in the vote suggest
bailouts and free immigration are under stress.
The odds that places like Greece or Italy or Puerto
Rico will be left to face their problems on their
own, have increased. But that's not bad. Bailouts
just lead to "moral hazard" an incentive to
continue self-destructive habits like borrowing
and spending and then getting bailed out. If
better policy results, not bailing them out is good.
And free immigration, while a huge positive for
those who get to escape violence, intolerance and
a real lack of freedom, also allows terrorists to
move more freely. It also means the very people
who could be agents of change in their home
country are leaving, not staying, and pushing for
change. There are really only "Four Threats to
Wealth Creation." They are, 1 Monetary Policy,
2 Tax Policy, 3 Trade Policy, and, 4
Burdensome Spending and Regulation. Getting
them right leads to prosperity, getting them
wrong leads to recession.
For us to believe in a forecast of recession, those

"threats" have to be real. We never change our
forecast based on things like the BP Oil Spill,
tapering, a few weak data points, Brexit,
declining or rising energy prices, a Greek default,
Hindenburg Death Crosses, or the multitude of
other things that led people to, wrongly, forecast
imminent recession in recent years.
The only way we will ever shift our forecast is if
one "threat" turns serious (say the Fed lifts rates
to 5%, or Donald Trump actually puts 45% tariffs
on imports) or multiple "threats" become
negative. For example, the Great Depression was
caused by mistakes in all four threats to wealth
creation.
Right now, the Fed is not tight, trade is more free
than it was 20 years ago, tax rates are about
where they were in the 1990s, and, yes, spending
and regulation are a burden, but one which the
private sector has been able to absorb. The US is
only growing 2% per year, not 4%. But, given the
size of government, 2% growth is actually a
positive sign that new technology is able to create
enough wealth to offset the burden of
government.
In the end, the most significant factor signaling
the underlying health of an economy is profits or
losses. An economy creating profits is growing.
And with second quarter earnings beginning to be
released, we expect a much more positive outlook
to prevail in the months ahead. As a result, just
like we have done consistently over the past seven
years, we are dismissing the hypochondriacs'
claims that "this time" is the real deal. It's not.
Stay calm, and carry on. With profits rising, stocks
will follow and optimism will generate profits.

Goldman issued their latest opinion of a
pullback that will lead to a buying opportunity.
From Barrons: The S&P 500 will continue to be
range-bound during the remainder of 2016. We
expect a pullback of 5%-10% driven by rising
policy uncertainty, unstable global growth, and
decelerating buybacks. However, above-trend US
GDP growth, a cautious Fed, and an earnings
recovery will return the S&P 500 to 2100 by yearend, extending the flat market of the past two
years
The fallout from Brexit is just one of several
headwinds to U.S. equity returns in the next few
months. Other risks include the upcoming U.S.
presidential election, unstable growth and policy
in China, and a deceleration in corporate
buybacks, which represent the largest source of
demand for US equities.
Telecommunication
Services:
Communications (LVLT)
Level
Recommendation and list changes. Based on

comparative valuation, revised earnings
projections and the recent market strength, five
stocks moved up to a Full Speed Ahead or Power
Up rating and three moved down to Neutral.
Check your portfolio for adequate diversification
and add in the financial and consumer cyclical
sectors as these are the only two sectors trading
at a minimum of 6% below Morningstars fair
value.
However, despite Brexit we expect decent U.S.

GDP growth of 2% in the second half of 2016.
Aside from negative risk sentiment, potential UK
weakness should have a minor fundamental
impact on the S&P 500 because Europe in
aggregate contributes less than 10% of total S&P
500 revenues
Goldman Sachs Equity Research Buy-rated S&P
500 stocks on the Americas Conviction List in
overweight sectors:
Consumer Discretionary: Amazon.com (AMZN),
Dollar Tree (DLTR), Lowes Companies (LOW),
Mohawk Industries (MHK), Time Warner (TWX)
Health Care: Allergan (AGN), Amgen (AMGN),
Baxter (BAX), Bristol-Meyers Squibb (BMY),
Cardinal Health (CAH), Medtronic (MDT), Thermo
Fisher Scientific (TMO)
8
Guiding Mast Stock Rankings July 2016

Guiding Mast Stock Rankings
Guiding Mast Rankings are based on price to forward
earnings growth ratios, current dividend yield, forward
earnings yield, S&P Equity Ranking, and consensus of
broker timeliness. The investment time horizon for Guiding
Mast Rankings is 3-years. The list below comprises the top
30 stocks, in order, of the 132 equities followed by Guiding
Mast Investments. These are worthy of additional research.
The highest Navigator Ranking is Full Speed Ahead,
followed by Power Up, Neutral, and Power Down
Full Speed Ahead

FIG
FORTRESS INVESTMENT
KKR KOHLBERG, KRAVIS, ROBERTS
BGCP BGC PARTNERS
PWCDF
POWER CORP
UNH UNITED HEALTH
JCI
JOHNSON CONTOLS
BNS BANK NOVA SCOTIA
LNC LINCOLN NATIONAL
DM
DOMINION MIDSTREAM LP
FLEX FLEXTRONICS
GS
GOLDMAN SACHS
TGT TARGET STORES
GMT GATX
LOW LOWES
KEY
KEYCORP
OZM OCH ZIFF
TPX
WBA
HD
MS
BRK-B
CTSH
SHPG
SEIC
WFC
HIFR
Power Up
TEMPUR SEALY
WALGREENS BOOTS
HOME DEPOT
MORGAN STANLEY
BERKSHIRE HATHAWAY
COGNIZANT
SHIRE PHARM
SEI INVESTMENT
WELLS FARGO CORP
INFRA REIT
BDX
BLK
BAC
MERC
MOV
BECTON DICKSON
BLACKROCK
BANK AMERICA
MERCER INT'L
MOVADO
Stocks Moving Up and Down in

Guiding Mast Rankings
The following are stocks that moved up to or
down from the top two buy tiers over the past
month:
UP
KEY
KEYCORP
WFC WELLS FARGO
BLK
BLACKROCK
BAC BANK AMERICA
MERC MERCER INTL
Down
HRC HILL-ROM
AFL
AFLAC
HOG HARLEY DAVIDSON
Noteworthy Near Misses

As our methodology has a relative focus (Firm A is
mathematically higher ranked than Firm B, and then review
the top 30) rather than an empirical focus (all firms over a
preset number), near misses are a great place to find ideas
worthy of further research. In addition to those moving
down only a few points, this months noteworthy near
misses are:
CBI
CHICAGO BRIDGE AND IRON
EXPE EXPEDIA
CAH CARDNIAL INDUSTRIES
Guiding Mast Stock Rankings July 2016

Two Highest Ranking Stocks by Sector
*= New this Month
High Quality and Low Valuation

Market Plays
Basic Material: Mercer Intl (MERC), DuPont (DD)
*= New this Month
Consumer Discretionary: Lowes (LOW), Tempur

Sealy (TPX)
Standard and Poors S&P Capital IQ Research Services

offers an Equity Quality Ranking system that rates
companies on two factors: Consistency in 10-yr Earnings
Growth and Consistency in 10-yr Dividend Growth. A+ is
the Highest with B+ considered Average. Of the 4,000 or
so companies followed by S&P (of which 450 have equity
ratings), there are only 47 firms qualifying for A+ ranking,
and 132 with either an A+ or A ranking. Listed below
are companies with A+ or A ranking and highest on our
Guiding Mast Recommendation List: (*= New this Month)
Consumer Staples: Walgreens Boots (WBA),

Target (TGT)
Energy: Dominion Midstream (DM), Chicago
Bridge and Iron (CBI)*
Financial: KKR (KKR), Fortress Investments (FIG)*
Health Care:
Pharma (SHPG)*
United Healthcare (UNH), Shire
Industrial: GATX Corp (GMT), Johnson Controls

(JCI)
Tech: Flextronics (FLEX), Cognizant (CTSH)
Utilities: InfraREIT (HIFR), Exelon (EXE)
10
A+
BRK-B Berkshire Hathaway
TGT Target
UNH United Health
WBA Walgreens Boots
BNS
HD
SEIC
JCI
A
Bank Nova Scotia
Home Depot
SEI Investments*
Johnson Controls
M* and Technical Guidance July 2016

Morningstar Sector
Fair Market Valuation
Morningstar offers Market Fair Value calculations for
sectors it follows. When valuation is 1.00, the sector is
fairly valued, when over 1.00, the sector is overvalued and
when below 1.00 the sector is undervalued. Below is a 4month table of each sector as of the end of the month.
2016
2016
2016
2016
52 wk
March Hi/Low
1.06 1.22-0.79
0.95 .99-0.82
0.84 0.95-0.72
1.00 1.05*-0.86
1.07 1.10-0.93
0.90 1.07-0.85
1.05 1.11-0.93
1.00 1.09-0.89*
1.01 1.40-0.75
1.01 1.04*-0.88
1.00 1.05-0.87
0.97 1.02-0.86
0.98 1.05-0.83
0.96 1.05-0.85
0.92 0.97-0.80
1.01 1.06*-0.93
1.01 1.07*-0.86
Sector
June
May April
Basic Material
1.18
1.16
1.21
Consumer Cyc
0.94
0.92
0.93
Financials
0.82
0.86
0.86
Real Estate
1.05
1.00
1.02
Consumer Def
1.09
1.06
1.07
Healthcare
0.96
0.95
0.95
Utilities
1.09
1.07
1.06
Telecom
0.97
0.97
0.98
Energy
1.31
1.28
1.37
Industrials
1.02
1.00
1.02
Technology
1.00
1.00
0.99
All M* Stocks
1.01
1.00
1.01
NYSE
1.03
1.01
1.02
NASDAQ
0.96
0.97
0.97
Cyclical Stocks
0.95
0.94
0.95
Defensive Stocks
1.04
1.04
1.03
Sensitive Stocks
1.05
1.03
1.04
* New High/Low During Last 30 days
Source: Morningstar, Guiding Mast Investments
Margin of Safety
The following table outlines the difference between the
current market vs. the corresponding technical
support/resistance levels of Moving Averages and Point &
Figure charts. These numbers are offered as a % over or
under the respective trend indicators. This could be
described as the Margin of Safety, or the percentage
movement until a technical reversal is reached.
Month
End
June 16
May 16
April 16
March 16
Feb 16
Jan 16
Dec 15
Nov 15
Oct 15
Sept 15
Aug 15
July 15
June 15
75-day 200-day
MA
P&F
RSP
MA
$ 80.35
1.4%
4.4% 4.2%
$ 80.19
4.2%
4.7% 2.7%
$ 79.51
5.4%
3.8% 0.7%
$ 77.38
4.3%
0.8% 1.8%
$ 73.66 -1.1% -4.9% 3.6%
$ 72.38 -5.3% -8.2% -7.8%
$ 76.64 -0.7% -3.4% -0.5%
$ 79.13
2.7% -0.8% 2.7%
$ 78.70 -1.5%
1.4% 2.2%
$ 72.96 -7.6% -9.8% 1.3%
$ 76.58 -5.1% -5.2% 4.7%
$ 80.30 -1.5%
0.0% 1.6%
$ 80.25 -2.0%
0.5% 1.6%
Source: Guiding Mast Investments
Technical Market Trends:

Positive
The top four sectors offering the best value are

Financials
Consumer Cyclicals
Health Care
Telecom
New 52-Week Fair Market Value Highs and Lows
Highs: Real Estate, Industrials, Defensive,
Sensitive
Lows: Telecom
11
RSP Chart 1-Yr, 75-day MA in Gold,

200-day MA in Blue

Guiding Mast Investments utilizes the 75-day moving average
(MA) and the 200-day MA as reference points for mediumterm market trends. We rely on the Equal-Weighted S&P 500
ETF (RSP) as the market indicator. With an equal-weighted
index, each component is rebalanced to an equal amount
quarterly to reflect price movements and offers a broader
reflection of overall market trends than the market-weighted
S&P 500 ETF. When the current price is above both the 75and 200-day MA, the trend is Green or Positive. When the
current price is below the 75- and above the 200-day MA, the
trend is Yellow or Caution. When the current price is below
both the 75- and 200-day MA, the trend is Red or Negative.
Current Price RSP

75-day MA
200-day MA
$80.35
$79.26
$76.80
Last Month $80.16

Last Month $76.42
Last Month $76.39
goes up to the next box, a x is marked. When the price

movements goes down to the next box, a o is marked. Each
time there is a movement of more than 3 boxes, a trend is
established. If it is reversal, then another column is added
to the chart. Once you get the hang of it, P&F chaarts are
very useful in tracking trends. A bit of additional
explaination concerning P&F chart trends: There are over
a dozen P&F signals, but only two basic signals. X's
represent advancing columns and O's represent declining
columns. P&F columns alternate as prices reverse and
change direction. A basic P&F buy signal occurs when a
column of X's exceeds the prior column of X's. A basic P&F
sell signal occurs when a column of O's exceeds the prior
column of O's. It's that simple.
X indicates stock is achieving a higher price level
0 indicates stock is achieving a lower price level
Point & Figure Technical Chart of RSP

Guggenheim S&P 500 Equal Weight ETF
Courtesy of StockCharts.com
P&F Pattern: No Recent Trend - Neutral (same from
last month)
Reversal of Trend: Above $81, Below $77 ($81 /
$78 last month)
Bullish/Bearish Price Objective: $109 (new)
Overall: Neutral Reading on P&F Chart
No new Trend, but a seesaw month with 3 box
reversal 0 followed by another 3 box reversal ,
as indicated with the most recent X. Note the
red 6 indicates beginning of the month of June
activity.
More information on P&F Charting:
http://stockcharts.com/school/doku.php?id=cha
rt_school:chart_analysis:pnf_charts
A Point and Figure Chart is a simple graphic that provides a
bit longer history than many conventional charts. The chart
is maintianed in a series of columns with boxes
representing the stock price. When the price movements
12

Laymans Interpretation
Mid June: Lots of technical stuff in this area
Continue to Keep Your Eye on the Ball: The S&P

500 index has rallied back to test the top of
resistance at 2085-2099. A move above this zone
would be a bullish development, in our view, and
suggest an impending attempt to break above
2115 and test the all-time high at 2134. Support
remains at 2041-2066 on any pullback.
Many investors are surprised how much markets
can whipsaw in such a short time. The above
charts go from Bullish to Bearish to
Bullish/Neutral, all within a few weeks time. Not
to mention the 7.0% decline in the S&P 500 from
the daily high to the low over just 2 days.
Late June: And were back
The follow charts of the S&P 500 tell the story of

last month. These are courtesy of Dave
Moenning, Heritage Capital, almost-daily missive
on the technical health of the markets.
End of May: Breakout is Positive (if it holds)
As shown, there were substantial differences in

the trends as described above, as outlined in the
black trend lines. The current is a trend within
the channel of 2120 on the high and 2040 on the
low.
The corresponding high/low range in the RSP is
$81.90 and $78.00, with the current reading of
$80.35.
13

Interesting to note the increase in current value
offered by the big money center banks. With the
sector out of favor, these behemoths are offering
some unusual undervaluation. While treading
lightly on the increased risks of globalized banks,
well managed financial companies could offer
intriguing opportunities.
Time to stay the course and to focus on dividend
paying stocks. There are still some bargains out
there, they are just becoming harder to find
outside the financial sector.
14
Best Stocks of the Month July 2016

Johnson Controls: From Hoover Ball
Bearing to Tycos Rolodex of 3
Million Clients
Johnson Controls (JCI) is a mid-cap industrial firm
offering steady growth at a fair market valuation.
Founded in 1883, JCI has a long history of
earnings and dividend growth, fueled by a
combination of acquisitions and organic growth.
WS Johnson, founder of JCI, is the father of multizone heating systems, inventing the multi-zone
pneumatic control system. Called an electric
tele-thermoscope, this system of multiple
thermostats and heating/cooling zones is still a
major component of JCI today.
steel tanks and ball bearings in 1949 to

automotive seats and interiors. At that time, JCI
was a manufacturer of automotive batteries,
looking to expand its auto OEM business. We
owned some shares in Hoover and participated in
the acquisition by JCI. I have owned JCI on and
off since 1985, depending on college education
tuition payment requirements. As all my kids
have graduated and its not yet time for
grandkids to suck me dry, Im a current
shareholder.
JCI continues to transform its business and has
announced major restructuring over the past 12
months. JCI announced it was spinning off its
auto interiors business while retaining its auto
battery business, now called the Power
Segment.
The interiors business accounted of 54% of 2015
revenues, making the split a substantial change in
business profile. JCI recently sold some non-core
auto assets and established a joint venture with
Hitachi for others. JCI is pursuing a spin-off of its
Automotive Experience business. Following the
separation, which is expected to take effect in
Oct 2016, the Automotive Experience business
will operate as the independent, publicly traded
company named Adient.
JCI has expanded into a major worldwide player

in the building and construction energy efficiency
business, and the company continues to morph
its business.
I first learned of JCI in 1985 when the company
purchased a firm of which we owned stock. My
brides grandfather had been on the Board of
Directors of the Hoover Ball Bearing Company,
which itself had morphed from manufacturing
15
Management also announced it was merging

with Tyco Intl (TYC), a fire/security alarm system
company, and plans to move its headquarters
from Milwaukee to TYCs home country of
Ireland. TYCO offers home and commercial
security and fire protection systems, and
purchased the Brinks Security firm in 2011. Under
the terms of the agreement, JCI shareholders are
expected to own about 56 percent of business
equity, and Tyco shareholders will own about 44

percent. The company will have annual revenues
of $32 billion.
Tyco brings an active rolodex of over 3 million
customers. Johnson Controls has a network of
15,000 heating and air conditioning service
providers. The ability to cross-market security
and fire protection programs with building
energy efficiency platforms for heating and
cooling is an intriguing opportunity. It is this
cross-marketing that is driving the merger and
refocus of JCI.
While auto OEM accounts for 25% of battery
sales, the spin-off of Adient will greatly shift JCIs
customer risk away from concentric automotive
trends to more ongoing building maintenance
and construction. JCI should no longer be lumped
together with low-growth automotive suppliers.
EBITDA
Building
$ 1,531
Power
$ 1,608
Tyco
$ 1,831
$ (267)
Corporate
Cost Synergies $ 500
$ 5,203
New JCI
Adient
Current JCI
Value Per Share

$
14.00
$
14.00
$
17.00
$
(3.00)
$
4.00
$
46.00
$ 1,494 $
$ 6,697 $
4.00
50.00
Source: Credit Suisse

Fast Graph offers a visual explanation of the
undervaluation of JCI. Below is a 20 yr. chart of
share prices and valuations. The black line is the
current price, the blue is a price at a 13.5 PE and
the orange line is a price at a 15 PE. These historic
valuations puts 12-month price targets of
between $53 and $58 into play.
And being categorized as an auto supplier has

hurt share values. According to Credit Suisse, the
new JCI, with Tyco merged and Adient spun off,
will improve valuations. The Building Efficiency,
Power, and Tyco segments EBITDA could create
share prices at 10.5 to 11.0 times while the auto
Adient business could be valued as low as 4.5
times EBITDA.
According to Credit Suisse, JCI is currently worth
about $50 a share, while it is trading at a price
below $45. Several other analysts also have price
targets in the $50 to $55 range, make the current
share price undervalued by between 13% and
22%.
Below is a table of segment EBITDA expected for
Fiscal Year Sept 2017 in millions and the value per
share, as offered by Credit Suisse:
16
According to fastgraph.com, JCI has generate an

11.3% 20-yr average annual returns vs 6.9% for
the S&P. However, over the previous 3 and 5
year time frames, JCI has underperformed and
the automotive supplies sector has not been an
erupting volcano of opportunity. With the spin-

off of Adient and the merger with Tyco, better
days should lie ahead for shareholders.
The restructuring and refocus of JCI comes with a
higher execution risk. It is this risk that is creating
uncertainty and a lower current valuation. The
ongoing yield of 2.3% is not very exciting, but is
more than offset by a 14% 5-yr dividend growth
rate.
Investors looking for growth and income should
take the time to review Johnson Controls. As the
cloud of uncertainty lifts with increasing earnings
growth and a successful cross-marketing
campaign, JCIs PE multiples should expand from
its current 11 to a more reasonable 13 to 15.
Stock Ideas off the Radar Screen
Some higher dividend, income, and capital gain-oriented

equities are intriguing and may not part of our investmenttracking list. These may include ETFs, MLPs, REITs, or
Preferred issues. Follow-ups may or may not be available in
the future.
Spectra Energy Partners (SEP): Low risk natural

gas pipeline MLP. I have owned SEP for several
years, making my first purchase in mid-2012 with
share prices at $31 and a quarterly dividend of
$0.48 ($1.92 annually). Shares now trade at $46
and the quarterly dividend is $0.64 ($2.56
annually). This represents an increase in income
of 35% and capital appreciation of 48% over the
past 4 years.
Spectra Energy Partners is one of the largest
pipeline MLPs with assets including more than
15,000 miles of transmission and gathering
pipelines, approximately 170 billion cubic feet of
natural gas storage, and approximately 4.8
million barrels of crude oil storage. SEP is a MLP
17
spin-off of Spectra Energy (SE), a natural gas

utility. SE is the General Partner and the parent
with about $6 billion in projects under
construction that will eventually drop down to
SEP, fueling SEPs continued growth. SE has
identified an additional $20 billion in projects
that could move forward by the end of the
decade. With a market cap of $13 billion, SEP is
the 9th largest US pipeline company, and has
strong exposure to the growing footprint in the
Marcellus shale, the USs most prolific gas play.
The core of SEP's gas pipeline system is Texas
Eastern Transmission, a massive pipeline that can
move 10% of U.S. gas consumption and which
runs from the Gulf Coast to New York, directly
through the heart of the Marcellus. SEP also owns
Algonquin Gas and the Maritimes and Northeast
Pipeline, providing gas to New England along with
50% of Gulfstream, one of the major gas pipes
into Florida. The key and unique feature to this
pipeline system is that all of Spectra's gas
pipelines are interconnected. Utilization on the
pipes is high and all pipelines generate fixed-fee
cash flow from long-term contracts, making SEP
one of the most stable cash generators in the
MLP sector.
SEP is one of the few MLPs that acts as a pure

tollbooth operator--it has no commodity price
exposure, and about 95% of its income stems
from long-term capacity contracts. The average
term of its contracts remaining is between 9 and

10 years.
In the current low gas price
environment, many MLPs are struggling with
their commodity exposure.
As shown below, over the past 5 years, SEP has
greatly outperformed its peers as calculated by
the total return of the Alerian MLP Index. A $100
invested in SEP on Jan 1 2011 would have been
worth $188 as of last Dec vs $107 for the Alerian
MLP Index and $180 for the S&P 500.
Source: Spectra Energy Partners 10-K

However, as with most MLPs, SEP pays a pretty
penny to SE for General Partner services.
Typically compensated by Incentive Distribution
Rights, or IDRs, SEP pays its general partner fees
based on cash available for distribution, with
incentive thresholds along the way. SEP currently
pays a fee equal to a maximum of 50% of
distributable income over $0.45 per share per
quarter. This will total about $300 million in 2016
and is expected to rise to $475 million in 2018,
and represents General Partner payments
increasing from $1.00 per SEP share in 2016 to
$1.58 in two years.
the General Partner is an approach I utilize to

take advantage of lucrative IDRs.
SEPs network of interconnecting gas pipelines
connects several major gas fields with substantial
user markets. Below is a map of this network.
Source: Spectra Energy Partners 10-K

Income investors seeking a reasonable 5.5% yield
with the tax advantages of a MLP should review
SEP if it is not already in the portfolio. The quality
of its assets, the growth platform as laid out by
management, and the lack of commodity
exposure should make Spectra Energy Partners a
quality, long-term investment selection.
While typical in the industry, it is important for

investors to appreciate the payments going to
the General Partner. Owning both the MLP and
18
Notes from the Top July 2016

Notes from the Top
Harley Davidson (HOG) buyout target? Rumors
are rampant that KKR (KKR), the private equity
firm, along with competitor Polaris, is looking to
make an offer to buy HOG. HOG share prices
reacted strongly to the new, jumping about 20%
in one trading session. However, the recent run
up is causing brokerage firms to reduce their
recommendations. For instance, on July 1, HOG
was reduced from a buy to a hold at Baird,
with others soon to follow.
over the past several years, Medicare and

Medicaid lines of business have been the main
source of enrollment growth for UnitedHealth.
The company successfully absorbed the revenue
resulted from the Medicaid expansion
attributable to the Patient Protection and
Affordable Care Act (ACA). In addition, following
the acquisition of Catamaran, the revenue at
UnitedHealths health care services operation,
Optum, experienced significant growth, and as of
first-quarter 2016 accounted for 37% of earnings
and 35% of revenue prior to eliminations.
Moreover, the earnings generated from Optum
operations are non-regulated and do not require
approvals for dividend payment. Furthermore,
Optum businesses provide technological and
product support to insurance operations, bringing
innovations and enhancing capabilities for better
quality of care and management of members
health. UnitedHealths earnings remain strong,
with the lead insurance entity, UnitedHealthcare
Insurance Company (UHIC), generating $14.7
billion of underwriting gains and $11.9 billion of
net earnings over the past five years
GATX (GMT) is changing its ticker symbol. The
new symbol is GATX.
United Healthcare (UNH) retains its financial

quality rating.
AM Best, the insurance rating
agency, recently reaffirmed its A rating. In its
report:
The rating affirmations reflect
UnitedHealths strong diversified operations
supported through continuous profitable growth
of insurance and non-insurance businesses.
UnitedHealth has maintained its leadership
positions in the health insurance market through
consistent growth in multiple commercial and
government products, and services over 47
million individuals. In line with an industry trend,
19
Shire Pharmaceutical (SHPG) completed its

purchase of Baxalta. Recently spun off from
Baxter Intl (BAX), Baxalta is a specialty drug
maker and offers additional platforms for
growth. SHPGs main products include the ADHD
drug Adderall XR and Intuniv, along with
medicines for rare diseases. With the addition of
Baxalta, SHPG not only expands its product line
but also increases its new biotech drug pipeline.

Mercer Intl is headed for a troubled 2016 but a
vastly improving 2017. For 2016, Mercer
International expects to face some top-line
headwinds including annual maintenance
downtime for its three pulp mills. Moreover, the
company expects seasonal maintenance
downtime in Europe and weak inventories in
China to put pressure on pulp prices in secondquarter 2016. Disappointing first-quarter results
(reported $0.14 vs $0.18 consensus) as well as
future outlook have made investors skeptical.
Over the last 60 days, the Zacks Consensus
Estimate for the stock decreased 18% to $0.96
per share for 2016 and 6% to $1.87 for 2017.
However, based on this reduced EPS profile, the
current share valuation is a 2016 PE of 8.3, low by
most comparisons. In addition, the stock pays a
dividend of $0.46 for a yield of 5.8%. Even with
the reduced 2016 expectations, the dividend
should be considered reasonably safe with a
payout ratio of around 50%. RBC and Credit
Suisse have MERC rated as a Buy, while TD
Ameritrade downgraded to a Hold in late April.
Cognizant Technology (CTSH) is well-liked across
Wall Street. The firm provides IT consulting and
business process outsourcing services worldwide
and operates through four segments: Financial
Services; Healthcare; Manufacturing, Retail and
Logistics; and Other. It offers consulting and
technology services, such as IT strategy, program
management, operations improvement, strategy
and business consulting services.
Though
Cognizant is based in the United States, it
primarily uses an offshore workforce in India. The
company is well positioned for a variety of trends
in IT services, and many expect it to increase
earnings well in excess of the industry average.
The companys solid second-quarter results were
broad-based. In addition the company raised
20
second-half guidance, and it is considered a solid

conservative technology holding. With a 2017 PE
of 15 and an EPS growth rate of the same, CTSH
is offering current value in line with its long-term
opportunities.
Tech firm Flextronics (FLEX) gets some love from
major credit agency. Moodys upgraded FLEX
outlook to stable. The rating upgrade reflects
Moody's views that Flex has demonstrated steady
progress in diversifying its capabilities beyond its
roots in electronics manufacturing services
("EMS"). The new collaborative design and build
model between the company and its customers
allows it to capture growth opportunities from
new customers and markets. The company has
delivered steady financial performance and now
has a customer base that is less concentrated and
that extends across an expanded industry set. The
stable outlook reflects Flexs' strong credit profile
as it affords it the flexibility to manage operating
and business challenges, which are persistent in
its line of business, especially as the industry
evolves from contract manufacturing to involve
greater design and collaboration with its
customers.
Supporting Moodys viewed is the firms cash
balance of $1.5 billion. Of the current price of
$11.65, almost $3.00 is in cash. Backing out the
cash balance, FLEX is trading at a 2016 PE of 7.0
and a 2017 PE of 6.3. FLEX pays no dividend, but
is expected to expand earnings by 16%.
Power Corp (PWCDF) writes down European

investments but raises the dividend. The
Canadian financial firm wrote down the value of
its holding in the Brussels-based European
holding company Groupe Brussels Lambert. The
write-off shaved quarterly earnings by C$0.31 a
share. Management also raised its dividend from
C$1.24 for the year to C$1.35, an increase of 7%.
The current dividend yield is 5.0%. PWCDF has a
64% interest in Power Financial, owner of
Canadian insurance firm Sun Life and US asset
manager Putnam Investments.
Becton Dickinson (BDX) offers long-term value
at current prices. BDXs Carefusion acquisition
in 2015 positioned the company as one of the top
five medical device companies globally. The
acquisition has yielded better-than-expected
synergies to date and continues to be on track.
Becton Dickinson has a strong portfolio of
products with a leading market position in most
of its segments. As with most international
companies, revenues were affected negatively by
currency headwinds in 2015. US Dollar weakness
in 2016 has helped soften the currency impact.
Additionally, various partnerships, expansion
across international markets, and the crossselling opportunities resulting from the
CareFusion acquisition have positioned Becton
Dickinson for long-term growth.
21
Moreover, the company has been a dividend

aristocrat with consistently increasing dividend
payouts for more than four decades, thus
providing added value to shareholders. While
share prices are not particularly undervalued and
many consider BDX fully valued, BDX offers
security of earnings growth coupled with a long
history of inflation-beating dividend increases.
BDX should be considered a core healthcare
position.
Hedge Fund manager Och Ziff (OZM) struggles.
Assets under management AUM continue to fall
from both a performance and withdrawal basis.
As of July 1, management announced its AUM of
$39.2 billion vs Dec 31 2015 AUM of $45.5 billion.
Management also reported 6 month
performance reviews of its three largest funds,
and it was not good.
June 2016 Year-to-Date
Net Returns Net Returns
Estimate
Estimate
OZ Master Fund
-0.91%
-2.14%
OZ Asia Master Fund
-0.59%
-3.56%
OZ Europe Master Fund -1.49%
-1.61%
OZM management continues to struggle with
fund performance, AUM, and legal issues. While
rated high on Power Ratings, it is based on a
turnaround next year with anticipated earnings
of $0.93 in 2017.
On the plus side, several equities research
analysts recently issued reports on OZM shares.
Jefferies Group reaffirmed a buy rating;
Citigroup Inc. reaffirmed a hold rating;
Compass Point reaffirmed a neutral rating and
a $4.00 price target; Royal Bank Of Canada
dropped their price target from $8.00 to $7.00

and set an outperform rating on the stock in a
research note on May 31st; Bank of America Corp.
lowered shares from a buy rating to a neutral
rating.
FIG is doing better than OZM. Fortress
Investment Group LLC (FIG) was named Hybrid
Hedge Fund Manager of the Year by Institutional
Investor at the magazines 14th Annual Hedge
Fund Industry Awards. The award recognizes
outstanding achievement by the Drawbridge
Special Opportunities Funds, Fortresss flagship
credit hedge fund strategy. These funds manage
$19 billion of the $72 billion assets under FIG
management.
22
Strategic Subject of the Month July 2016

What is the Forward PEG Ratio and
Why Should I Care?
One of the most basic stock fundamental analysis
ratios is called the PEG ratio, or price to earnings
growth. This ratio measures the value of todays
stock price to the earnings growth potential of
the company, with the basic axiom of share prices
are driven by long-term earnings growth. The
formula is pretty simple: Current price divided by
earnings divided by anticipated earnings growth
rate. For example, Johnson Controls (JCI) is
trading at $44 and earned $3.56 per share over
the preceding 12 months. Earnings are expected
to grow by 12% annually over the next 5 years.
JCI has a trailing PEG ratio of (44/3.56)/12, or
1.03.
PEG ratio proponents believe a large cap stock is
fully valued when the PEG ratio is 1.0, or when
the PE ratio equals the underlying earnings
growth rate. For mid- and small-cap stocks with
higher EPS growth rates, fair valuation can be
stretched to a PEG of around 1.25. A PEG ratio
below 1.0 is considered undervalued and over
1.25 as overvalued. PEG ratios below 0.50 are
considered grossly undervalued and PEG ratios
over 1.75 to 2.0 are considered grossly
overvalued.
I favor the Forward PEG Ratio, which is a version
of the description above. Rather than using
trailing 12-month earnings, I use next years
projected earnings in the formula. Since the goal
is to find stocks that are currently undervalued
based on next years earnings fundamentals,
using a forward PEG ratio helps in this specific
pursuit. I have been using the Forward PEG Ratio
23
calculation since the mid-1970s, long before it

was given a name.
Some industries have historically low growth
rates compared to their PE ratios. For example,
it is not uncommon for utilities to trade at PEG
valuations of 3.0 and higher. If a stock is
considered more of an income asset than a
growth asset, a higher PEG ratio should be
acceptable. However, comparable forward PEG
ratios are still useful in high PEG ratio industries
as a measure of comparable valuations. For
example, a utility selling at a PEG ratio of 2.5,
could offer better value than one trading at 3.5.
The second part of our 2-part newsletter service
offers a spreadsheet with the forward PEG ratio
calculations of each of our followed companies as
one of the columns.
Keep in mind stocks can trade for years either
overvalued or undervalued. The PEG ratio is a
tool to understand where a specific stocks
valuation lies among its peers and the alternative
investment opportunities. Most investors have
portfolio exposure to the bond market through
mutual funds, and many are considered back of
the drawer investments. Much like old,
mismatched socks, some investments tend to
just sit in the back of the drawer, collecting
interest and dividends. However, there are risks
to understand before you put bond funds away
until needed.
Subscriptions, How to Use Your Newsletter, About Us

Subscriptions
Guiding Mast Investments newsletter is available
on a subscription basis. Annual rates are:
1 Year
$ 85.00
2 Year
$150.00
3 Year
$210.00
Please send check payable to George Fisher at:
George Fisher
Guiding Mast Investments
10 Forest Ave
Saratoga Springs, NY 12866
Money Back Guarantee - Within the first 90 days, if

you are unhappy for any reason, your full subscription
rate will be refunded no questions asked. However,
we would appreciate your feedback at any time.
Newsletter delivery is via the internet using pdf

format. Hard copies via U.S. Mail are available for a
nominal charge.
How to Use Our Newsletter

Guiding Mast Investments newsletter comes in two
parts 1) the written commentary and 2) the
spreadsheet of the companies we follow. #1 is pretty
simple. #2 is a bit more complicated and may need a
bit of explanation.
Part 2 is an excel spreadsheet in a pdf format. This
lists the companies we follow and a bunch of
fundamental analysis calculations. Starting at the left
column:
24
Stock ticker symbol,

stock name,
stock price,
2015 estimated EPS,
2016 estimated EPS,

+ or indicates a movement up or down since
last updated,
anticipated 5-yr EPS growth rate,
last updated,
Forward PEG (price to earnings growth) ratio
based on 2016 EPS estimates,
Guiding Mast Ratings,
Guiding Mast Recommendations,
last updated,
S&P Quality Equity Rating with A+ being the
highest, B+ as average and NR for Not Rated,
current broker consensus for timeliness,
current dividend,
dividend yield,
industrial sector,
Guiding Mast handicap based on S&P Quality
Ranking,
2015 and 2016 EPS yield,
2-yr consensus price target,
% gain to price target,
anticipated annual total return based on the
price target and current yield.
Our formula used in evaluating these factors locates

companies that have the following characteristics:
Reliability in generating increase earnings and

dividends for the previous 10 years (S&P
Quality Rating);
Value based on 2016 price to earnings
growth, with PEG ratios of 1.0 to 1.2
considered fully valued
Well liked on Wall Street for timeliness
Higher dividends
The Guiding Mast Ratings are listed in numerical

order with higher numbers indicating more favorable
ratings.

The perfect stock would be rated A+ by S&P, would
be trading at a 2016 PEG Ratio less than 1.0, would
have a broker timeliness consensus ratio of at least
2.5, an earnings yield of 8%, and would have a
dividend yield of 5% or higher. As stocks move above
or below these fundamental criteria, the Guiding
Mast number changes. For instance, a company rated
B+ for Quality carries a handicap of 12 while an A+
company has no handicap.
The top 15 companies of the 132 followed qualify for
Full Speed Ahead classifications while companies
numbered 16 to 30 are listed as Power Up.
Comparatively, these stocks should offer better total
returns for the risk taken. The bottom 20 stocks are
classified as Power Down and could be candidates for
sale. The balance of stocks are listed as Neutral,
which is neither a buy nor a sell.
Reviewing stocks with higher Guiding Mast Ratings
and higher anticipated total annual returns based on
consensus price targets should produce a list of
companies worthy of consideration for your
investment portfolio.
financial decisions. An understanding of the tools

used to assess ones personal risk factors and the
methods of finding investments that meet these
factors can be easily incorporated in most individual
portfolio construction.
Guiding Mast Investments offers both a monthly
newsletter and multi-part financial and portfolio
education training with the advantage of personal
communication. Topics include Assessing Personal
Risk, Asset Classification and Diversification, Equity
Research, Value Fundamentals, and Portfolio
Implementation.
Fisher is a Seeking Alpha contributor and SA has
published over 330 articles since 2010. Fisher also
contributes to the financial website TalkMarkets.com.
He occasionally uses the pen name Jon Parepoynt. A
list of his previous SA articles can be found at:
http://seekingalpha.com/author/george-fisher
However, as always, conduct your own due diligence

to determine if a particular investment is right for
your portfolio construction and your appetite for risk.
All investments, even safe bonds, carry a particular
risk to your invested capital and that risk should be
appreciated prior to investing.
About Us
George C. Fisher, founder and publisher of Guiding
Mast
Investments,
believes
methodically
incorporating overlooked equities in a diversified
portfolio approach is far from rocket science. Guided
by the framework of Modern Portfolio Theory, Fisher
locates equity investment opportunities using widely
distributed value indicators and advocates a
minimum three-year investment horizon for most
25
Fisher is the creator of the 1997-2004 investment

newsletters Power Investing with DRIPs, focused on
timely selections of dividend paying stocks. Fisher has
published two books through McGraw-Hill,
All About DRIPs and DSPs, and The StreetSmart Guide
to Overlooked Stocks.
Fisher has experience as a Registered Investment
Advisor, a financial author, and an entrepreneur.
Fisher brings a variety of expertise to his clients, from
corporate operational appreciation, to personal

investment planning and management to stock
market analysis skills.
Fishers work experience covers a variety of fields.
Prior to being a RIA, he spent 15 years as a corporate
manager at Georgia-Pacific Corp before venturing out
on his own, operating several businesses from
manufacturing to export marketing management.
President Ronald Reagan appointed Fisher to the
National Advisory Council overseeing the US Small
Business Administration from 1988 to 1991.
For a complete list of equities followed by Guiding
Mast Investments, please contact us.
Much like a guiding mast light assists in safe passage
for the captain and owners of sailing vessels,
GuidingMastInvestments.com helps teach the tools
financial experts use in portfolio design and
management.
More information is available at:
www.GuidingMastInvestments.com
Read our Equities and Market blog at:
http://www.GuidingMastInvestments.com/news/
Guiding Mast Investments logo is a register trademark
and used exclusively by permission from
aceboater.com
26

Tear Sheet July 2016

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Tear Sheet July 2016

Uploaded by

Copyright:

Available Formats

July 2016

Tear Sheet July 2016

Morningstar & Technical Guidance

Publishers Commentary: July 1, 2016

Morningstar Sector Fair Market Valuation;

GDP forecast is not very dire

More market rollercoaster rides, please. Page 2

Look South for Big Trouble, Not Across the Pond.

Guiding Mast Stock Rankings

Moving Averages and P&F Charts

Best Stocks of the Month

Notes from the Top

Strategic Subject of the Month

Subscriptions, How to Use Your Newsletter Page 24

1 Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com

We Help You Better Manage Your Money

Publishers Commentary July 2016

exception of Jan and Feb of this year. This is the

This is the second month running with a

The Atlanta Fed has been consistent in their

Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com 2016

Publishers Commentary July 2016

suggest RSP support in the $81.50 range, with a

2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017

RBC offers the following chart for share price

Share prices broke out of their Jan 2015 to March

In the wake of the Brexit vote, most analysts and

Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com 2016

Publishers Commentary July 2016

and to geopolitical analysts in generalthat the

Now the pouting pundits of pessimism are once

Newly Opened Panama Canal Expansion

Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com 2016

Publishers Commentary July 2016

So every coup is now literally allowed in South

happens next in Brazil and it will have global

Cash is King-er, but also a contrarian buy signal.

Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com 2016

Publishers Commentary July 2016

Source: Federal Reserve Bank of Atlanta

Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com 2016

Publishers Commentary July 2016

For us to believe in a forecast of recession, those

Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com 2016

Publishers Commentary July 2016

Recommendation and list changes. Based on

However, despite Brexit we expect decent U.S.

Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com 2016

Guiding Mast Stock Rankings July 2016

Full Speed Ahead

Stocks Moving Up and Down in

Noteworthy Near Misses

Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com 2016

Guiding Mast Stock Rankings July 2016

High Quality and Low Valuation

Basic Material: Mercer Intl (MERC), DuPont (DD)

*= New this Month

Consumer Discretionary: Lowes (LOW), Tempur

Standard and Poors S&P Capital IQ Research Services

Consumer Staples: Walgreens Boots (WBA),

United Healthcare (UNH), Shire

Industrial: GATX Corp (GMT), Johnson Controls

Guiding Mast Investments Saratoga Springs, NY geo@GuidingMastInvestments.com 2016