1. Which is more important?
The “stars” or the timeliness ranking?

2.  In this session we will look at both the
Morningstar and Value Line databases.
 We will compare the findings of one data
base with the other.
.

3.  On the surface, the two databases look a
lot alike. Each has sections for stocks,
mutual funds, and ETF’s.
 Each has a ranking system. Value line
uses a one through five system with one
being the best and five the worst.
Morningstar uses a star ranking that has
five the best to one the worst to help users
choose stocks.

4.  The library’s subscriptions in both
services compare well to each other in
most areas of coverage. However, the
Morningstar subscription also coverers
ETS, while our Value line subscription
does not.

5.  The Value Line service has several different
categories of rankings on the one to five scale.
These are:
 1. Highest approximately 100 stocks
 2. Above Average approximately 300 stocks
 3. Average approximately 900 stocks
 4. Below Average approximately 300 stocks
 5. Lowest approximately 100 stocks

6.  Morningstar on the other hand uses a “star” system.
 The “stars” correspond to the expected rate of return for
the investor in the financial instrument.
 5 star, a rate of return greater than cost of the stock.
 4 star, above average rate of return
 3 star average return
 2 star below average return
 1 star, the stock is expected to loose money
 Note that the rating system is the reverse of that used by
Value Line, i.e. one is highest and five lowest

7.  We will rank the portfolios that each has on their sites
by the ranking that the other uses.
 Morningstar by Value Line’s timeliness rank.
 Value Line by Morningstar’s “star” ranking system.
 The results may surprise you!

8. This portfolio is for those who are termed “aggressive” investors. It is one
that Value Line thinks will have a good chance to have substantial
appreciation over the next12 months. There is risk involved in this
portfolio as well as any of the others.
Note that this portfolio like all portfolios is subject to change due to
market conditions and the financial stability of each company. This
portfolio was current as of the date of inception, which was February
13, 2012.
We will follow these portfolios over time to see which, if any actually
make a profit.
Also note that in all likely hood, our results would be better if we daily
monitored these stocks. Or if we took protective measures like stop losses
which are written at a certain percentage like 3% up to say 6% of the
amount invested. We should always try and make sure we have some
way to get our funds out of the market if the trade turns against us.

9. Four Stars Three Stars Two Stars 0 Stars
AAPL AAP DTV CSTR
NSC BLL FL DAN
TEVA MIICF GCO HELE
PVH KEX KMT
TKR ODFL MAT
TGI
%Ret % Ret %Ret %Ret
17.33 6.85 7.70 6.07

10. For the moderate investor, includes stocks that
will provide above-average income and whose
prices have the potential to increase.
Typically, more conservative investors will be
most comfortable with this portfolio.

11. List of stocks from this portfolio. These are intended for income
and potential price appreciation.
Four Stars Three Stars Two Stars One Star
ABT KO LMT MOLX
CVX CL WMT
COP DD
RSG EMR
SNY HON
SNA INTC
UPN KFT
MCD
UPS
VZ

12. Four Stars Three Stars Two Stars One Star
ABT KO LMT MOLX
CVX CL WMT
COP DD
RSG EMR
SNY HON
SNA INTC
UPN KFT
MCD
UPS
VZ
%Return % Return %Return %Return
2.24 2.29 1.28 3.41

13. Emphasizes stocks with worthwhile
appreciation potential. It is most
appropriate for investors focused on
long-term capital gains.

14. Stocks in this list with Morningstar ranking.
Five Stars Four Stars Three Stars Two Stars 0 Stars
HAL GES AFL HOG CBOU
JNJ CVS HRL DY
MOS DIS ESL
NOV MGA
PEP XLNX
X CELG
UNH
GOOG

15. Five Stars Four Stars Three Stars Two Stars 0 Stars
HAL GES AFL HOG CBOU
JNJ CVS HRL DY
MOS DIS ESL
NOV MGA
PEP XLNX
X CELG
UNH
GOOG
% ret %ret %ret %ret %ret
-10.48 +4.53 +5.56 +5.17 +9.53

16. Focuses on stocks with above-average
dividend yields. Investors with an interest
in current income are likely to find interest
here.

17. Here are the stocks in this portfolio with the Morningstar Star
rank.
Four Stars Three Stars Two Stars 0 Stars
ABT LNT BT ALRP
RDS.A DD BTI LG
HNZ ED TA.TO
IP OGE WPC
MCD RAI
NOC SO
POR
SLE

19. Four Stars Three Stars Two Stars 0 Stars
ABT LNT BT ARLP
RDS.A DD BTI LG
HNZ ED WPC
IP OGE
MCD RAI
NOC SO
POR
SLE
%Ret %Ret %Ret %Ret
3.13 1.15 2.33 -5.86

20. Stars are useful, up to a point.
The Value Line timeliness may be a better
indicator of future stock growth potential.
Note that it is only useful for a usually limited
period of time. The user will need to set stops and
check at least weekly to determine if your
investment goals for the stock have been met.
We will still need to set “stops” so no matter what
the market does we will still be able to preserve
our capital.

21. Ranked One Ranked Two Ranked Three Ranked Four Ranked Five Unranked
DFS 3star ZMH 4star CMP 4 star Payx 4 star CX 4 star
CSCO 4 star STRA 3 star JOE 5 star
MSFT 4 star EBAY 4star KMX 3 star
AMGN 3 star ADSK 3 star
CME 3 star
NOV 4 star
ISCA 3 star
ORCL 5 star
WU 5 star
IGT 4 stars

22. Rate of Return
Ranked 1 Ranked 2 Ranked 3 Ranked 4 Ranked 5
DFS 3star ZMH 4star CMP 4 star PAYX 4 star CX 4 star
CSCO 4 star STRA 3 star JOE 5 star
MSFT 4 star EBAY 4star KMX 3 star
AMGN 3 star ADSK 3 star
CME 3 star
NOV 4 star
ISCA 3 star
ORCL 5 star
WU 5 star
IGT 4 stars
One Two Three Four Five
+15.17% +2.46% -3% +11.00 -8.64%

23.  We have ranked Value Line by
Morningstar. We have also looked at the
Value Line portfolios listed by the “stars”
system.
 It would appear that the factor of
timeliness, at least in the short run is a
reasonably good indicator for the
potential for stock growth.