Update: New Computer Investing Products
by CI Staff
ValueTool is a new Web-based program that allows you to quickly see if a stock is overvalued or undervalued based on seven valuation techniques: the dividend discount model; free cash flow to equity; free cash flow to the firm; price-earnings ratio; price-to-cash-flow ratio; price-to-book-value ratio; and price-to-sales ratio. Results are displayed in a color-coded graph.
The seven valuation models are labeled on the horizontal axis and results are displayed in a bar graph. Bars shaded green indicate a valuation greater than zero and red signifies less than zero. To make comparisons more straightforward, all charts have the same vertical axis range. A jagged line is used to denote a valuation number outside the range. The stock price is placed on the chart allowing users to see if the price is greater than, less than or equal to a particular valuation.
Any stocks with prices below the valuation measures are said to be undervalued by the market and those with prices higher than the valuations are considered overvalued.
Multiple charts can be displayed simultaneously for easier comparison of companies. Worksheets can be customized to track different portfolios or groups of companies.
To learn more about the valuation tools, users can read an in-depth summary on each model, including how they are derived and calculated. Clicking on the components of each equation displays the values used in the individual calculations for all companies in the database.
A free demo version allows investors to try out the program using the 30 companies that comprise the Dow Jones industrial average. Worksheets cannot be saved and only one worksheet can be viewed at a time with the demo version.
Financial Advisor for Excel
Financial Advisor is an Excel spreadsheet programmed with 73 financial calculators that are useful for both beginning investors entering simple calculations and veteran investors performing more complex analysis.
The downloadable spreadsheet contains default examples to show how each page works. Equations that calculate net present value, breakeven points, loan payments and more simply require the user to enter appropriate data—such as interest rate and payment amount. For example, to calculate the monthly payment for a new car, the Auto Purchase sheet requires users to enter the payment period (monthly, annual, etc.), the amount of payment per period users can afford to make, number of years, annual interest rate, down payment amount and car value. Various monthly payments are automatically calculated to show the ideal payment that meets the user-defined criteria.
There are eight main categories used to organize the calculators. Valuation of Flows contains calculators for periodic, even, and variable cash flows, lump sums and more. The Financial Analysis section includes breakeven analysis and DuPont analysis, while the Rates of Return section can be used to calculate the cost of capital and rate of return with taxes. Bond prices, duration, convexity and volatility are found in the Inversions section. To compute loan payments and refinancing options as well as the future values of lump sums and annuities, investors can use the Loans and Future Value worksheets, respectively. The Personal sheet details mortgage qualification and debt capacity, while the Miscellaneous sheet can be used for conversions of interest rates and currencies.
Two versions of the spreadsheet are offered. The standard version contains locked cells so that calculations are not inadvertently altered by the user. In the full access version, all cells are unlocked so that users can analyze and personalize the calculators to customize the models. A demo version with partial functionality is available.
On-line discount broker E*Trade has a new commission schedule. The revised plan offers incentives for all clients, but active traders will realize most of the benefits.
The monthly number of trades clients must make in order to be considered an active trader has been lowered from nine to five trades. The lower commission fees for active traders are now $9.99 per trade for five to 49 trades per month; $7.99 per trade for 50 to 499 trades per month; and $6.99 per trade for over 500 trades per month. Non-active traders with less than $50,000 in assets still pay $14.99 per trade, while non-active traders with over $50,000 in assets pay a reduced rate of $11.99 per trade.
For active options traders, fees now start at $0.75 per contract. An options specialist has been added to the site’s active-trader service team as well.
Additionally, E*Trade’s two-second trade guarantee now includes exchange-traded funds.
Ameritrade Izone is a streamlined version of discount broker Ameritrade designed for individual investors who manage their accounts on-line. Investors can trade equities on the Internet for just $5 per trade, including market and limit orders. (Broker-assisted trades are $24.99 for market orders and $29.99 for limit orders.) Option trading has a separate commission schedule that can be found on the Web site.
Customers can open an account, place trades, contact client services and access monthly statements through Izone. A fully customizable Web site and access to streaming quotes and SnapTicket, a detachable order-entry ticket, are all available to Ameritrade Izone customers.
BusinessWeek Online has added new content to its Web site. Free on-line seminars conducted by industry experts are available on topics ranging from starting your own business to equipping your home office with the latest gadgets.
Subscribers of BusinessWeek magazine can read additional commentary and articles on-line. The site also added 12 features to the BW50 Online section, which lists the 50 best-performing companies according to BusinessWeek. Additions include interactive scoreboards and company data provided by Standard and Poor’s.
Access to the site is free.
New features have been added to the Barron’s Online Web site, grouped into an area called Online Exclusives. The Inside Scoop is a daily news feature highlighting insider activity at major companies. Charting the Market highlights the day’s biggest movers with charts and a short summary.
Twice per day, users can read Hot Research AM and PM, a collection of excerpts from market-moving Wall Street reports, and the Investor’s Soapbox, which contains selections from leading investment newsletters.
Full access to Barron’s Online costs $99 per year ($49 for users who subscribe to the print versions of Barron’s or the Wall Street Journal).