Six Free Web Sites Investors Should Bookmark

One of the challenges I face as a portfolio manager is handling the daily onslaught of data. It's like trying to drink water from a fire hose; you want to sip through a straw so you don't get your face ripped off. I'm constantly on the lookout for market data services that are better, faster and cheaper than the 30 or so sources I presently use.

I'd like to highlight several excellent and mostly free investment tools that I routinely use in my investing and money managing. Each tool offers a unique insight or presents data in a uniquely useful fashion.

Ed Yardeni's Stock Market Valuation Calculator

An oft-debated topic is whether the stock market is over- or undervalued given current price-to-earnings levels. As I discussed in Stock Market Valuations: Too High, Too Low or Just Right? last spring, the real question is whether the S&P 500 is overvalued given forward P/E levels and expected interest rates.

Ed Yardeni, the chief economist at Deutsche Banc Alex. Brown, built a model to evaluate the stock market's valuation by these parameters. You enter your own expectations into the model (I, for example, think earnings for the S&P 500 will grow 5% in 2002, and the 10-year Treasury yield will average 5%), and the calculator will tell you if the market is fairly valued, based on the historical relationship between earnings and interest rates.

According to my expectations, then, the S&P 500 is fairly valued at current levels. Yardeni also gives the consensus numbers from I/B/E/S and the current yield of the 10-year (at present, those numbers show a 2.6% decline in earnings and a yield of 4.92%, marking the S&P 500 as 5.6% overvalued).

Whenever there's a big move in interest rates or the major averages, this model gives me a quick bullish/bearish reading. In case you're wondering, it gave a screaming buy reading the week after the Sept. 11 attack, with the S&P 500 estimated at that time at 21% below fair value.

MarketGuide's Ratio Comparison Report

Basic data on stocks are plentiful and free on the Web, but for detailed information I like MarketGuide. It was originally a very expensive non-Web product, then a $40/month Web product, and it's now a free product after merging with Multex. In particular, I use the ratio comparison report because it allows me in one screen to size up a company vs. its industry group, sector and the S&P 500 (note that to view a ratio comparison report, you'll need to register on the site first). Just enter a stock symbol, select "quote" and then select "ratio comparison" under "company information."

If I were to do a ratio comparison of Johnson & Johnson(JNJ Quote), for example, I quickly see that JNJ is priced a little more richly than the average S&P 500 stock, reflecting the stability of its revenue and earnings growth. I also see that it's got a low beta and large operating margin, and is priced in line with its industry group. So no easy money to be made here, but no obvious risks either.

Zacks Earnings Estimates (Company Report)

Zacks is one of two services that aggregate analysts' earnings estimates. As we all know by now, these estimates are less than perfect, given accounting problems and investment banking conflicts. However, there's still useful information in seeing how a company's prospects stack up relative to its peers and to the S&P 500. Zacks now makes these estimates available for free, summarized in the Company Report.

Looking, for example, at the report for Wal-Mart (WMT Quote), if you skip down to the Company vs. Industry section, you'll see the following chart.

Zacks' Company Report on Wal-Mart

Here we see that Wal-Mart outgrew its industry group by 6.2% over the past five years (the comparison with the S&P 500 is temporarily unavailable), but is expected to grow at a slower rate compared with peers (13.9% vs, 17.3%) over the next five years. This implies that Wal-Mart's forward P/E of 37.9 is too generous.

I wouldn't necessarily make a buy or sell decision based on this one report, but it's a useful reality check.

Chuck Hill's Market Commentary at First Call

First Call is the other service that aggregates earnings estimates. Although access to its reports is by subscription only (note: you can get the same reports for free under the Research tab in Yahoo! Finance, the unique (and free) feature at First Call is Chuck Hill's Market Commentary.

This area interprets the analysts' aggregate data at the sector and market level in a concise and readable fashion. The commentary is updated weekly, but keep in mind, there's no archive. This week, about 25% of S&P 500 companies are reporting earnings, so now is as good a week as any to get in the habit of checking this report. Currently, Hill thinks the odds are high that the economy will begin to recover in the first quarter of this year.

Morningstar Instant X-Ray

A couple of years ago I wrote a column in which I described how to compile position data, sector allocations and risk factors such as beta into an Excel spreadsheet to analyze the risk of your portfolio. For a portfolio containing 40 stock/mutual fund positions, though, this could take all day.

About a year ago, however, Morningstar came out with its Instant X-Ray tool, which lets you do the same analysis in a fraction of the time.

Just take your year-end statements, including both stocks and mutual funds, and type in the symbol and current dollar value. The X-Ray report summarizes your asset allocation, style diversification, sector allocation, stock types, portfolio aggregate P/E ratio, yield compared with the S&P 500 and percentage of your portfolio allocated to the top 10 holdings.

I actually use the premium version of the tool, which costs $11.95 a month, to analyze prospective client's portfolios, replacing a previous service that cost several hundred dollars a month. The premium version gives me all the above reports, plus other useful reports and statistics, and lets me save individual portfolios for subsequent review.

TheStreet.com Economics Databank

Finally, The Economics Calendar is one of my favorite features at TheStreet.com -- a concise summary of the week's economic events including expectations, actual results, previous periods result, charts, source and an explanation of what the data mean in case you slept through your economics class.

I'm interested in learning if TSC readers know of other useful investment tools. Please email me links to Web-based tools that are one, free and two, unique or particularly clever in the way they function. I may feature these suggestions in a future column.