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Ben Sender  

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  • 3 Stocks For An Expensive Market [View article]
    While it's hard to rationalize price movements, particularly those under a year's time frame, I'd say most investors don't want to see MA above a PE of 30, and so it's price has halted until it sees more growth. The five year price graph, of course, show a much different picture.
    Sep 13, 2014. 09:50 AM | Likes Like |Link to Comment
  • - An Extraordinary Business Model That Encourages High Growth [View article]
    Thanks! And it would appear that I did in fact put a 1 in front of the number. I'll try to get that corrected.
    Aug 13, 2013. 02:05 PM | Likes Like |Link to Comment
  • Forecasting The Future Return On A Stock: McDonald's [View article]
    Thanks. I ran very similar experiments and got similar results. I think my point was that they were not the same, but still close. In this case, it didn't matter much. Although, if you were using a longer time frame and/or higher returns (i.e. 10% dividend, 15% earnings growth), the difference would be wider.
    Sep 18, 2012. 02:02 PM | Likes Like |Link to Comment
  • Forecasting The Future Return On A Stock: McDonald's [View article]
    Thanks. If you look at the models I provided it should confirm what you say. Compound growth is easy to mess up with as growth rate can change it dramatically. In this case, by adding dividend yield and earnings growth, an artificially high growth rate was created. What should be done is to find the total return (all dividends received + earnings growth * multiple change), and then find the n'th root of that to make it annualized (i.e. TR^.1 for 10-year annualized return).
    Sep 17, 2012. 08:23 PM | 2 Likes Like |Link to Comment
  • Forecasting The Future Return On A Stock: McDonald's [View article]
    As I see your last comment, I see where you're coming from. Try doing it for 2 years, or even better, 5 or 10 years. In your example it was only for 1 year. They won't compound together like you think. If you have both 10% dividend and 10% growth, they compound separately (and it's actually a little more complicated than that too, depending on a few other factors). Please try for yourself - its useless trying to explain this as a comment.

    But, for those of you who read this article, don't despair. The estimates put forth here are still very close. However, if the author had used a time frame such as 20 years, the estimates would be far off.
    Sep 17, 2012. 04:24 PM | 1 Like Like |Link to Comment
  • Forecasting The Future Return On A Stock: McDonald's [View article]
    As I read it, that model says capital gain + dividend = total return. Percentages are different. Even if I'm wrong about that, the math stays the same. The fact of the matter is that you can't add these two percentages. I invite you to do the math for yourself (as in step-by-step, year to year), as I did in my previous example: the result will be different from what you did. Perhaps the math you just did works for one year, but it becomes a far different picture when you compound it, as you did in the article. By having a 5% dividend, as well as 5% earnings growth, you're not necessarily doubling you're annualized return, but rather only your total return. The difference between the two becomes startling after only a few years.
    Sep 17, 2012. 04:15 PM | 1 Like Like |Link to Comment
  • Forecasting The Future Return On A Stock: McDonald's [View article]
    Exactly. Compound growth is a tricky area, as it relies on a certain growth rate. By adding dividends to earnings growth, he effectively rose the growth rate (for the annualized return), even though earnings is still compounding at 9%, and dividends at 9% (if payout ratio is consistent).

    Example: A stock is growing at 20%, the dividend yield is 10%, the dividend is growing at 20%, the price is 10 and the P/E is 10. The correct way to calculate the return would be to do 1*1.2^5 * 10(P/e) + dividends received. Dividends received =(.1)+(.1)*1.2+(.1)*1.2^2 etc. In total, the future value of this stock would be $27.54, compared to today's $10, for an annualized return of 22%. On the other hand, if I were to add dividend yield to growth, I would have gotten an annualized return of 30%. In just five years time, this would put my figure way off mark. If I were to use this for 10 or 20 years time, the figure would be approximately 5 times larger.
    Sep 17, 2012. 12:13 PM | Likes Like |Link to Comment
  • Forecasting The Future Return On A Stock: McDonald's [View article]
    I'm not sure if the way in which you calculated the return using dividend yield is correct. You can't just add the dividend yield to the earnings growth to get the annualized return. Depending on how the dividends are reinvested, how the payout ratio changes and a few other mathematical factors, the way you did the calculation can become way off. Annualized growth, and in a broader sense compounding growth, can do a few tricky things that make it hard to use accurately.

    In this case, I would have calculated each return separately, and then calculated the annualized return from there. That is, predict future earnings and multiply it by the multiple and add that product to the total amount of dividends received over the next 5 years (which would be about $16.75, if you agree that earnings can grow at 9% and the payout ratio will remain at about 50%). The resulting sum could then be turned into an annualized return by doing x^.2, for 5 years. Overall good article, but be careful with the math you use for compounding.
    Sep 17, 2012. 11:54 AM | 1 Like Like |Link to Comment
  • McDonald's: 10% Annualized Return Opportunity [View article]
    Good point but you're a little off. That number is closer to about 46%, and its not all from the land necessarily. That 46% includes rent (for land), and some of the fees charged. Perhaps your 2/3 number includes the Franchise royalties too, which would bring 46% up to 68%. The other third of their profit comes from their own company operated stores.
    Sep 17, 2012. 11:27 AM | Likes Like |Link to Comment
  • 3 Reasons Wendy's Stock Offers A Cut Above Investment Opportunity [View article]
    Good try but I think you should look beyond the "key statistics" and into the real depth of Wendy's. Wendy's has only made $10 million last year, and it lost $5 million the year before that. This means that even if it can stay stable at $10 million (which it hasn't been able too, as almost every quarter in the past 10 years it has lost money), it would take 35 years to pay off current liabilities alone (which are due in less than 1 year). It would take over 230 years to pay off all of its debt, and that assumes it is able to earn at the level it has this past year. Now, this may seem very bleak but that's mainly because of taxes and depreciation (which you left out in your article); Wendy's is actually bringing in much more cash than this small earnings number.

    My conclusion: Wendy's is an inefficient company with low margins and high leverage. This article would be dramatically better if you accounted for things that made Wendy's bad, as opposed to only including what makes it good. Also, I'm not sure where you got your numbers, as others have stated too. It seems your growth figures are way off (the historical ones, which are factual not predictions). On the other hand, a company like McDonald's has extremely stable earnings, fast and stable earnings growth, a healthy balance sheet and a durable competitive advantage. You would be hard pressed to point out one thing bad about McDonald's, but it is quite easy to find several about Wendy's.
    Sep 9, 2012. 06:19 PM | 2 Likes Like |Link to Comment
  • Earning A 17% Annualized Return With Coach [View article]
    What I interpreted it as was just a high-risk move. Berkshire is very large, too large to just pick up a few good companies. When Buffett does decide to make a 10B purchase, the share price surges, making it impossible to buy much more. He has stated countless times that he is finding it more and more difficult to make money with such a large size. GM was cheap enough that he could make a purchase.
    In addition, Buffett is very "American-oriented". He believes you can't go wrong investing in America, which I relate to his investment in GM. If the economy is able to pick up, GM will do very well. There cost structure is improved, and they have a competitive lineup.
    Jul 13, 2012. 02:01 PM | Likes Like |Link to Comment
  • Earning A 17% Annualized Return With Coach [View article]
    Sadly, I agree. I am looking for an exit on GM. For the record, Warren Buffett is investing in GM currently because of the supreme cheapness. But, GM does not fit the bill as an amazing company - which is what he usually agrees with. I purchased GM following a Graham philosophy (of just buying cheap stocks after carefully evaluating the risk), but COH follows the modern Buffett methodology of that quote. RL does too, but as stated, not as well as COH does. The margins and overall brand aren't strong enough to constitute a competitive advantage, at least using Buffett's standards, for RL. For that reason, RL and GM are not amazing companies - RL doesn't have much going for it when compared to COH, but GM is cheap. It's price and strategic advantages (because of the government restructure) may lead it to go higher in the next 3-5 years, but it is not investment grade like COH.
    Jul 13, 2012. 01:34 PM | Likes Like |Link to Comment
  • Earning A 17% Annualized Return With Coach [View article]
    Thanks for saying it better than I'm allowed to. I think that from here on, I'll avoid replying to comments that trolling or irrelevant. It seems that those who have the motivation to comment are usually motivated negatively. The ones who are on the other end (in that they enjoyed the article, agreed or have a constructive question) generally write me a personal message - those I give the most attention too.

    Ben Sender
    Jul 13, 2012. 01:24 PM | Likes Like |Link to Comment
  • Earning A 17% Annualized Return With Coach [View article]
    No problem. If you have any future questions please message me.

    Ben Sender
    Jul 13, 2012. 12:44 PM | Likes Like |Link to Comment
  • Earning A 17% Annualized Return With Coach [View article]
    I'm sorry I didn't even see that question. Apple is in my portfolio and in my online portfolio (which people subscribe too). But, that is none of your business. If you actually read my articles and the analysis, why would my disclosures be relevant? I don't just say Buy or Sell, in which a disclosure would be relevant as it could prove the motives of the author. I have all of the facts here that I used to form my basis, so you can make a judgment for yourself. I encourage this judgment to be different than mine, but using relevant evidence. You are for some reason bringing up TA in an article that isn't using it at all, as opposed to disagreeing with what was presented in the article.

    You can continue to obsessively check the disclosures of my articles from a year ago, or fact check everything I have ever said on Seeking Alpha, but I don't see the point. Your first comment demonstrates no curiosity or actual commentary, but rather only trolling, ranting and intrusiveness. What is your motivation of posting comments like this? I really would like to know because SA is being ruined by this. Honestly, I apologize for responding to you like this, but it is warranted considering your invasive and rude questions that were unprovoked and unnecessary. I am glad to respond to a different point of view, or even harsh critisism if it has basis. Unfortunately, you have no basis. I have yet to see a single fundamental reason from you regarding my analysis, or my previous analysis (which for some reason was brought up?). Rather, I see talk about price swings and timing. Although I believe that is largely impossible, it may have a place somewhere. There are articles, published every minute, about "hot stocks" and speculatives like Gold. I have even made posts that include this. But, this article was entirely focused on the fundamentals of a company, and how they are amazing and only getting better. This would be the last place to bring up those type of TA topics. Still not sure why you did, other than to troll? Please do not comment again here. If you feel the need to get the last word, which I'm 100% sure you will considering your obsessively going through my past, just send me a message.

    Ben Sender
    Jul 13, 2012. 12:38 PM | 1 Like Like |Link to Comment