A Great Bargain In Today's Fully-Valued Market [View article]
Moneymaxx, Jonrice80 and Deja Vu, Thank you for your comments. Indeed the immigration reform is an issue but I believe that the US economy benefits so much from the expertise of Indians and other immigrants that the law cannot pass as it is. And even if it passes, CTSH will probably manage to adjust to the new conditions, as Deja Vu described. Moreover, the steep decline of the stock absolutely coincided with the reduced guidance of Infosys for this year's revenue so I believe that this weighted on the stock more heavily. Thank you again for your comments and analysis of the immigration issue.
My Top 10 Fairly Valued Fast-Growing Stocks [View article]
Thank you for your great articles. I have one note and one question: 1. AZO has achieved an excellent growth rate of EPS mainly by raising its debt. Its equity is a negative $1.5 B, which is minus $40 per share! It cannot keep buying its shares at the same rate so I expect growth of EPS to decelerate. http://seekingalpha.co...
2. I first heard of CTSH in a previous article of yours. I agree with you on everything about CTSH but do you have any idea why it has plunged lately? Thank you again for your excellent articles...
Credit Acceptance Corp. And CAN SLIM: Together They Equal Fat Profits [View article]
Very interesting article. I have one question: How does the company manage to avoid defaults of non-creditworthy consumers? And how did the company manage to greatly increase its earnings during the worst recession ever (2009), when millions of people defaulted on their home loans and car loans? Thank you for the article.
Should You Buy Before Or After Chevron And Exxon Report Their Earnings? [View article]
Hwood007, This is always the dilemma; if you wait to buy at a better price, you may lose a rally. However, if you have many great companies in your scope and you are patient, you will be given chances to buy some of them at bargain prices.
Should You Buy Before Or After Chevron And Exxon Report Their Earnings? [View article]
As I mention in the article, the recent underperformance can be justified by the decline in the oil price. However, oil stocks have underperformed since the start of the year, when oil prices were high. This may indeed reflect a pessimistic sentiment for future oil prices, on which I do not agree.
Should You Buy Before Or After Chevron And Exxon Report Their Earnings? [View article]
Alvingolub, Well, the purchase price does matter, Buffett says it and I agree. If you purchase XOM shares 10% lower than today, then this 10% will add on your account every year, as you will be gaining a 10% higher yield every year. After many years it adds up to a huge amount. Of course you mean that even without that 10% the returns of XOM will be great, which will probably be the case...
Should You Buy Before Or After Chevron And Exxon Report Their Earnings? [View article]
Passive-income-pursuit, I believe you will soon face an opportunity at $110. NeedMoreCoffee, the litigation of $19 B burdens the stock but all the oil companies have greatly underperformed during this year's rally. Your purchase in 2010 was great, as you will never see that price again unless in a major bear market or in a Macondo-type accident. I agree with you on your target of $110.
Should You Buy Before Or After Chevron And Exxon Report Their Earnings? [View article]
Geologist, Thank you for your comments. Indeed I believe that the new oil extraction method has not been studied thoroughly and hence I agree on your wording. However, I believe that its consequences should have probably been studied better before its widespread use. In reference to Exxon, your observation is very interesting. In addition, Exxon indeed has a strong support at $85, which however is likely to break temporarily on a general market correction. At $80 Exxon is a great bargain, at $85 it is a good deal too. Its rate of share buybacks indeed differentiates this company from the other oil companies. Thank you, again.
F5 Networks: Should You Surrender After The Sell-Off? [View article]
Tzimisb, I believe the expectation was simply based on the exceptional past growth of the company. When a company has pronouncedly grown every single year since its foundation (with the exception of 2008), it is very hard for analysts to go against the trend, risking being laughed at if the trend continues...
Why Chevron Has Been Outperforming Exxon [View article]
Phenom1, Thank you for your comment. Indeed the XTO purchase was not performed at the best period. In reference to the return on equity, XOM may have beaten CVX in all years after 2004 but there is a trap: XOM trades at a higher Price/book value than CVX (2.4 vs. 1.7 at the moment). And what you buy is the ROE divided by the ratio Price/Book value, which can be simplified into the reverse of P/E (or earnings yield as it is often called). To sum up, XOM has a higher ROE than CVX but trades at a higher P/Book value and the overall result is that they trade at the same P/E now. In my opinion one should care for P/E, not just ROE.
Why Chevron Has Been Outperforming Exxon [View article]
CVX is facing a $18 B lawsuit for a polution incident in Ecuador but CVX is claiming that the whole case is a fraud. Ecuador is threatening to seize Chevron's assets in Argentina but CVX is threatening Argentina that it will not continue its joint venture witrh the local company if its assets are not released. I trust the company and the amount seems too high to me (Macondo, the greatest disaster ever, will cost BP about $40 B in total).
F5 Networks Overview: What's Driving Its $130 Valuation [View article]
The stock price of FFIV has plunged even though the stock market is at all-time highs. Do you have any idea why the stock of FFIV has plunged? There has to be a reason and the worst part is that the stock price has declined with no news (as far as I know)...
Why Chevron Has Been Outperforming Exxon [View article]
I am copying a comment of mine for stock splits in the previous article about the two companies:
CVX has performed a 2:1 split in the years: 1973, 1981, 1994, 2004 while the stock price was $70, $75, $85 and$105, respectively. Therefore, there is high probability that CVX splits again its stock in the next 2 years. XOM has done the same in 1976, 1981, 1987, 1997, 2001 while the stock price was $105, $70, $75, $125, $80, respectively. So XOM is likely to split its stock too.
Actually, XOM has underperformed CVX in all below periods: 10 years: 150% vs. 260% 5 years: 5% vs. 40% 2 years: 7% vs. 15% 1 year: 3% vs. 11% This happened because CVX managed to grow its EPS much faster than XOM. So CVX is an exceptional company but I also like XOM thanks to its share buybacks (see my above comment that share buybacks are tax-free) and I believe that its EPS will greatly increase in the future thanks to its buybacks and whenever the price of natural gas spikes... (XOM produces oil and gas at a 50/50 ratio whereas CVX produces oil and gas at a 65/35 ratio).
Why Chevron Has Been Outperforming Exxon [View article]
Rjj1960, Indeed $85 is a strong support that has held for the last 6 months, I would set the same target for me to add a few shares too.
Xomstock, The effect of buybacks is strong and some investors (e.g. Buffett) prefer it because it is tax-free whereas the dividends incur a tax. However, the effect of buybacks is pronounced only in the long term. XOM would not be at $88 if it had not reduced its shares by 1/3 in the last 10 years. It would be at around $60 at the moment if it had not repurchased any of its stock. The compounding effect of buybacks is much greater than the compounding effect of dividends because buybacks are tax-free.
Michael, I remember your article, very good article indeed.
A Great Bargain In Today's Fully-Valued Market [View article]
Thank you for your comments. Indeed the immigration reform is an issue but I believe that the US economy benefits so much from the expertise of Indians and other immigrants that the law cannot pass as it is. And even if it passes, CTSH will probably manage to adjust to the new conditions, as Deja Vu described.
Moreover, the steep decline of the stock absolutely coincided with the reduced guidance of Infosys for this year's revenue so I believe that this weighted on the stock more heavily.
Thank you again for your comments and analysis of the immigration issue.
My Top 10 Fairly Valued Fast-Growing Stocks [View article]
I have one note and one question:
1. AZO has achieved an excellent growth rate of EPS mainly by raising its debt. Its equity is a negative $1.5 B, which is minus $40 per share! It cannot keep buying its shares at the same rate so I expect growth of EPS to decelerate.
http://seekingalpha.co...
2. I first heard of CTSH in a previous article of yours. I agree with you on everything about CTSH but do you have any idea why it has plunged lately?
Thank you again for your excellent articles...
Credit Acceptance Corp. And CAN SLIM: Together They Equal Fat Profits [View article]
I have one question: How does the company manage to avoid defaults of non-creditworthy consumers? And how did the company manage to greatly increase its earnings during the worst recession ever (2009), when millions of people defaulted on their home loans and car loans?
Thank you for the article.
Should You Buy Before Or After Chevron And Exxon Report Their Earnings? [View article]
This is always the dilemma; if you wait to buy at a better price, you may lose a rally. However, if you have many great companies in your scope and you are patient, you will be given chances to buy some of them at bargain prices.
Should You Buy Before Or After Chevron And Exxon Report Their Earnings? [View article]
Should You Buy Before Or After Chevron And Exxon Report Their Earnings? [View article]
Well, the purchase price does matter, Buffett says it and I agree.
If you purchase XOM shares 10% lower than today, then this 10% will add on your account every year, as you will be gaining a 10% higher yield every year. After many years it adds up to a huge amount.
Of course you mean that even without that 10% the returns of XOM will be great, which will probably be the case...
Should You Buy Before Or After Chevron And Exxon Report Their Earnings? [View article]
NeedMoreCoffee, the litigation of $19 B burdens the stock but all the oil companies have greatly underperformed during this year's rally.
Your purchase in 2010 was great, as you will never see that price again unless in a major bear market or in a Macondo-type accident.
I agree with you on your target of $110.
Should You Buy Before Or After Chevron And Exxon Report Their Earnings? [View article]
Thank you for your comments. Indeed I believe that the new oil extraction method has not been studied thoroughly and hence I agree on your wording. However, I believe that its consequences should have probably been studied better before its widespread use.
In reference to Exxon, your observation is very interesting. In addition, Exxon indeed has a strong support at $85, which however is likely to break temporarily on a general market correction. At $80 Exxon is a great bargain, at $85 it is a good deal too. Its rate of share buybacks indeed differentiates this company from the other oil companies.
Thank you, again.
F5 Networks: Should You Surrender After The Sell-Off? [View article]
I believe the expectation was simply based on the exceptional past growth of the company. When a company has pronouncedly grown every single year since its foundation (with the exception of 2008), it is very hard for analysts to go against the trend, risking being laughed at if the trend continues...
Why Chevron Has Been Outperforming Exxon [View article]
Thank you for your comment.
Indeed the XTO purchase was not performed at the best period.
In reference to the return on equity, XOM may have beaten CVX in all years after 2004 but there is a trap: XOM trades at a higher Price/book value than CVX (2.4 vs. 1.7 at the moment). And what you buy is the ROE divided by the ratio Price/Book value, which can be simplified into the reverse of P/E (or earnings yield as it is often called).
To sum up, XOM has a higher ROE than CVX but trades at a higher P/Book value and the overall result is that they trade at the same P/E now. In my opinion one should care for P/E, not just ROE.
Why Chevron Has Been Outperforming Exxon [View article]
Ecuador is threatening to seize Chevron's assets in Argentina but CVX is threatening Argentina that it will not continue its joint venture witrh the local company if its assets are not released.
I trust the company and the amount seems too high to me (Macondo, the greatest disaster ever, will cost BP about $40 B in total).
F5 Networks Overview: What's Driving Its $130 Valuation [View article]
Why Chevron Has Been Outperforming Exxon [View article]
CVX has performed a 2:1 split in the years: 1973, 1981, 1994, 2004 while the stock price was $70, $75, $85 and$105, respectively. Therefore, there is high probability that CVX splits again its stock in the next 2 years.
XOM has done the same in 1976, 1981, 1987, 1997, 2001 while the stock price was $105, $70, $75, $125, $80, respectively. So XOM is likely to split its stock too.
Why Chevron Has Been Outperforming Exxon [View article]
Please refer to my below article for an extensive comparison between XOM and CVX.
http://seekingalpha.co...
Actually, XOM has underperformed CVX in all below periods:
10 years: 150% vs. 260%
5 years: 5% vs. 40%
2 years: 7% vs. 15%
1 year: 3% vs. 11%
This happened because CVX managed to grow its EPS much faster than XOM. So CVX is an exceptional company but I also like XOM thanks to its share buybacks (see my above comment that share buybacks are tax-free) and I believe that its EPS will greatly increase in the future thanks to its buybacks and whenever the price of natural gas spikes... (XOM produces oil and gas at a 50/50 ratio whereas CVX produces oil and gas at a 65/35 ratio).
Why Chevron Has Been Outperforming Exxon [View article]
Indeed $85 is a strong support that has held for the last 6 months, I would set the same target for me to add a few shares too.
Xomstock,
The effect of buybacks is strong and some investors (e.g. Buffett) prefer it because it is tax-free whereas the dividends incur a tax. However, the effect of buybacks is pronounced only in the long term. XOM would not be at $88 if it had not reduced its shares by 1/3 in the last 10 years. It would be at around $60 at the moment if it had not repurchased any of its stock. The compounding effect of buybacks is much greater than the compounding effect of dividends because buybacks are tax-free.
Michael,
I remember your article, very good article indeed.