Monday, November 21, 2011


Sabrient rates TAL a Strong Buy for its superior value and growth profiles, which indicates a stock that should outperform the market. TAL International Group, Inc. boasts an outstanding value growth of 80.4 (out of 100) and more outstanding is its 100 score on growth. Rigorous backtesting reveals that stocks with similar growth profiles outperform the market in the long term especially if they continue to exceed expectations. Just last month it beat consensus estimates for the 3rd quarter by 10 cents to $1.01 per share. Even though the pay out ratio is above 50%, with strong performances like last quarter, that should be a minor concern.

Underlying TAL's excellent value scores is its earnings score of 70.1 and outstanding fundamental score of 86.9. TAL's forensic accounting score is average, which indicates its level of risk going forward. With these strong fundamental scores TAL is expected to significantly outperform the market over the near term.

TAL's next ex-dividend date is coming up on November 29 with a dividend of $0.52/share. The dividend yield is a very decent 7 1/2% and each quarter the ratio is 1.85%. Adding this position will increase exposure in the services sector but unique in the rental and leasing of transporters. RSY recommends a buy limit order of TAL 400 shares at a limit price of $26.99 for tomorrow's opening (GTC). Today's market weakness will probably reverse some at the opening, but still down over a dollar from Friday's close.

Since the last update, dividends provided almost $650 of gains in the model portfolio. RSY also closed out the call option on ARLP for a gain of $267 and the put option on DLX expired with a gain of $239. Below is all the transactions in the model portfolio since inception. (Click to enlarge.)

Optional Options
DELUXE CORP COM APR-12 $22.50 CALL @ $3.40 <>

WSTG 11-17-2011 AI 47 SS 4 {Insiders nominal.}

TAL 11-29-2011 SS 7 AI 53 {Insiders nominal.}:

TAL International: A Terrific Company - Seeking Alpha

Yahoo! Message Boards - TAL International Group, Inc. - EPS $ .54?
They made .54 vs .38 last year after adjustments for swaps
last quarter .70 vs .17.

Cash increased recently/

Depreciation creates a non cash charge.

Dividend is .52 vs .5 last quarter and .3 last year.

Company does not foresee major recession risk or default of a major customer.

Sales increased from Dec 10 alot more than the increase in Accounts Receivable. ( Positive) -- unless I am reading something wrong?

Company expects flat to down results from this quarter with the next.

Last year 4 th quarter they made 1.15 vs op income of .76 due to gain on swaps.
TAL says flat to down next quarter pre tax op income of $1.56.
As long as Europe and the US experiences no hard landing recession, TAL's payout of .52 a share will hold up.
People sold this one off anticipating recession.

I sold out months ago at 28.5 and 27.5 but did not buy back at 23 or higher. Spooked by the macros. TAL in 08 09 ELIMINTED the div! Stock went to 9 or less.

MACRO looks better, high dividend of 7.5 % plus looks good, but don't expect much capital appreciation from this point.

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Tuesday, November 01, 2011

Macro View: ISM October,

While the newest ISM reports did not indicate the start of a double-dip recession, both reports were weaker than expected. The Manufacturing ISM Report announced a drop of 0.8 to 50.8% which was below the consensus estimates of 52 and a range of 50.9 to 53% (Econoday Report: ISM Mfg Index). The Non-Manufacturing ISM Report announced an insignificant drop of .1 to 52.9% so that it fell into the consensus range of 52.2 to 54% but was below the consensus point 53.5% that signified that economists were expecting the index to raise 0.6% (Econoday Report: ISM Non-Mfg Index).

Even though the recent reports have shown continued weak and anemic economic growth, there was some surprises in the underlying indexes that could indicate positive news going forward. It was expected that the price pressures would continue to subside indicated by the number of commodities up in price declining along with the price indexes. In fact, the manufacturing report showed more commodities with prices down than up for both multi-month commodities and total commodities. Multi-month commodities up in price was 3 and 6 for commodities down in price, and the numbers for total commodities are 5 and 12 respectively. Thus the price indexes also dropped, for example the significant drop of the non-manufacturing index by 4.8 to 57.1%. Even more surprising was the manufacturing price index dropped an amazing 15 points to 41%. Also the net percent of respondents stating that prices were lower minus those responding higher changed from a positive 12 to a negative 18. This is even more significant drop since it plunged below the break even point of 50 (more precisely 49.4%). The report noted the significance of these events below along with the graphs for commodities with rising prices for manufacturing and non-manufacturing.
This is the sixth consecutive month the prices index has registered below 80 percent since December 2010, and is the first month of contraction since May 2009 when the index registered 43.5 percent. The last time the Prices Index decreased more than 15 percentage points was in June 2010, when it registered 57 percent compared to the prior month's reading of 77.5 percent.

Picking up steam or grasping at straws?
One bit of good news was that the manufacturing index for new orders reversed from negative territory to expansion after 3 months of contraction. The index rose by 2.8 to 52.4%. This may be a positive sign going forward but it seems too little and too late to be an important factor in the recovery. On the other hand, new orders dropped 4.1 to 52.4 for non-manufacturing index.

The biggest surprise from the reports was the non-manufacturing employment index reversed its short term declining trend below the break even point of 50, and the index jumped a descent 4.6 points to 53.3%. I certainly expected it to stay under 50 even if it was expected to increase over last months low of 48.7%. Below is a graph showing the non-manufacturing index since December 2009.

Looking forward
Even with the few positive signs, the problems the US economy faces is much larger than a one month expansion in new orders or reversal of short term employment trends. The biggest problem is arguably unemployment staying stuck in the 9% range. And only heaven knows how the Euro-crisis will be resolved. Greece may be small potatoes for the world economy, but if the financial problems topple over other unstable governments and financial institutions, then it will be hard to predict how far the contagion will grow.

ISM: 52.1
Services: 53.5

The Capital Spectator: Major Asset Classes | Oct 31, 2011 | Performance Update

Calculated Risk: ISM Manufacturing index indicates slower expansion in October

Calculated Risk: ISM Non-Manufacturing Index indicates expansion in October

Misc. Links:
Calculated Risk: Preliminary Vehicle Sales for October

David Smith's GDP calm in the storm

Mish's Global Economic Trend Analysis: GM Sales Barely Rise, Chrysler's Up 27%; What Does It Mean?

Calculated Risk: Construction Spending increased slightly in September

The euro crisis: Eurodoom | The Economist

Economist's View: "How My Taxes are Raised Matters"

Economics - Australia lowers interest rate to 4.5%

Bruce Bartlett: A Close Look at the Perry Tax Plan -

UK economy: Pretty Q3; ugly Q4 | The Economist

Economists React: U.K. Data No Cause for Celebration - Real Time Economics - WSJ

Class War Within a Class War

Payday Loans - Thomas Sowell - Townhall Conservative

Political Calculations: Projecting Fourth Quarter 2011's GDP

Midwest Economy: District Economy Update

Fiction Made in America

Class War Within a Class War

Environmental Economics: Blaming economists for our current economic situation is like blaming psychologists because people are crazy

Division of Labour: November 2011 Archives

Mish's Global Economic Trend Analysis: Bank of America Employees Flood Rivals with Resumes; BNP, ING Book Charges on Greek Debt, Slash Jobs; "Project New BAC" on Rip-Roaring Start

Tea Party vs. OWS: The psychology and ideology of responsibility | The Moral Sciences Club | Big Think

Consumers Remain Pessimistic - Real Time Economics - WSJ

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