Feb

2

2/4/2006 - As of this date, the 150 stocks listed in The Value Line 600 analysis of stocks rated #1 and #2 had an average yield of .75%.

If you think 'Growth Stocks' will give you a better return, you are mistaken. If your portfolio held the 100 Growth Stocks promoted by Valueline in October 2006, your return would be less than one-percent (.92% exactly).

The previous paragraph is a strong argument for investing in bonds and CD's rather than stocks. United States Treasury issues are returning yields of 4-5-6% - why take less?

Steve Ellison comments: 

Why take a measly 4.8% return from Treasury bonds when stocks have a better-than-average likelihood of double-digit capital gains? Using trailing 12-month earnings, the S&P 500 earnings yield is about 5.4%, compared to about 4.8% for the 10-year bond. Thus the ratio of the S&P earnings yield to the bond yield is about 1.12. The average of this ratio since 1988 is 0.79, suggesting stocks are cheap relative to bonds.

One who ignored capital gains and believed stock returns consisted solely of current-year dividends would have been bearish on stocks since 1958, when the major market averages' dividend yields fell below Treasury bond yields (maybe that is the reason the weekly columnist has been bearish all these years). The historical record does not indicate that such bearishness would have been a winning investment strategy.

Tim Melvin adds: 

Here's this year's list:

q
tibx
flws
anad
amcc
brcd
ceva
cbb
cmos
cry
gab
gmst
pdf
hlit
incy
lscc
oste
rfmd
read
skil
slr
stei
sunw
scmr
tsty
ctc
ctc
tqnt
uis
utsi
wtsla

Only q and tibx are rated one. The others rank two.


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