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Bill Gunderson
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Bill Gunderson @billgunderson is the CEO and Chief Market Strategist of Gunderson Capital Managment in San Diego, CA. He is also a professional money manager, former research analyst, author of Best Stocks Now, and developer of the Best Stocks Now smartphone app. He offers four free weeks to his... More
My company:
Gunderson Capital Management
My book:
Best Stocks Now! Summer 2011 edition
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  • Time to Dump Netflix? (NFLX) by Bill Gunderson,

    Time to Dump Netflix (NASDAQ:NFLX)?
    by Bill Gunderson

    One could argue that with a current PE ratio of 79, the valuation of Netlix (NFLX) is in the stratosphere and should be avoided. From my eighteen years of experience as a professional money manager, I have determined that for me the three most important criteria for a stock are Value, Performance, and Safety. 

    Let’s begin with value. A pure “value” investor would most likely stop reading this article once they see a PE ratio of 79 on Netflix. Consider for a moment however, that the stock has been growing it’s earnings at an average clip of 41% per year over the last five years. This makes it one of the great growth stocks of our day. The consensus analyst estimate for growth over the next five years is currently pegged at about 30%. 

    Consensus earnings estimates for this year are currently $6.53. We are now looking at a forward PE ratio of about 42 time earnings. If the analysts are anywhere to being close, Netflix (NFLX) will be earning roughly $18.50 per share five years from now. This would put the PE ratio of the stock at under 15 if the stock were to go nowhere over the next five years. I do not foresee the stock going nowhere over the next five years. In fact, I think one could make a good argument for the stock being close to a double over the next five years.

    To do this, Netflix (NFLX) would have to hit its five year growth projections and trade somewhere in thee mid to high twenties five years from now. I think that this is very doable. Netflix (NFLX) currently gets a valuation grade of A- in my grading system. 

    Now let’s turn to performance. How has the stock performed against the rest of the market of the short term, intermediate term, and long term? 

    Over the last one month, three months, and twelve months the stock has clobbered the market. In fact, Netflix (NFLX) is up 144% over the last twelve months, while the S&P 500 is up 17.9%. Netflix gets a short-term performance, or momentum grade of A+ in my grading system.

    Over the last three years, Netflix (NFLX) has averaged an astonishing 105% per year while the market has averaged 1.9%. Over the last five years Netflix (NFLX) has averaged 57.8% per year, while the S&P 500 has average 0.2%. The stocks receives an intermediate performance score of A+ in my grading system.

    Netflix (NFLX) does not yet have a ten year track record, therefore I cannot give it a long term performance grade. 

    My proprietary grading system gives Netflix (NFLX) a current grade of A+. It is one of only 10 stocks from a database of about 2,700 that currently receives my coveted grade of A+. 

    Morningstar currently gives the stock only 1 star out 5 in their grading system! How can this be? They give Cisco (NASDAQ:CSCO), a stock that has gone BACKWARDS by -1.6% over the last ten years, their highest rating of five stars. How can this be?

    To learn more about the proprietary Gunderson stock grading system, you can download my Best Stocks Now Lite app from the iTunes store. I developed the grading system and the app to help me with my professional management practice. 

    You can also follow me on twitter @billgunderson





    Tags: NFLX, CSCO
    Jun 07 7:01 PM | Link | 4 Comments
  • Who is Ursula Burns?

    Wait Wait: Don’t Tell Me:

    Who is the CEO of Xerox

    by Bill Gunderson

    Gunderson Capital Management




    “Who is Ursula Burns?”


    I was on the phone with an editor of Barron’s and she asked me what I thought about Ursula Burns.


    I had to confess: “Who is Ursula Burns?”


    The editor sounded disappointed I did not know the name of the CEO of Xerox (NYSE:XRX).


    She thought I might because I had suggested to Barron’s they write an article about all the CEO’s of publicly traded companies who sit on the President’s Job Commission.


    Ursula Burns is one of them. 


    In addition to Xerox, the commission featured CEO’s from GE, Intel (NASDAQ:INTC), Southwest Airlines (NYSE:LUV), Procter and Gamble (NYSE:PG), American Express (NYSE:AXP), Citigroup (NYSE:C), DuPont (NYSE:DD), Eastman Kodak (EK), Boeing (NYSE:BA), and others.


    And of course, the architects of the biggest debacle in American corporate history: Steve Case and Richard Parsons, the guys behind the merger of AOL and Time-Warner.


    Most of these companies have done a lousy job over the last 5-10 years in creating jobs and returning money to shareholders. Including Xerox.


    So what were they doing on the commission?


    I don’t recommend a single one of these stocks in my book -- Best Stock Now! -- or app.


    I see stocks like this polluting the thousands of portfolios I’ve seen over the years  as the owner of my own investment advisor company.


    The big brokerage companies love selling the big blue chippers.  Many are good companies.


    But they are lousy stocks.


    When you look at the money Xerox has been returning to investors, that is shrinking -7.9 percent a year for the last three years. 


    The other stocks are just as dismal.


    I do not know where the CEO of Xerox went to school. Whether she likes puppy dogs and long walks on the beach. Or anything like that.


    I don’t need to hear her carefully crafted promises of how well the company’s new products are going to do. Just show me: Can Xerox make money for its shareholders in tough times?


    That is what I want know about the CEO of Xerox.


    And that is way more important than her name.




    Tags: XRX, GE, C, LUV, INTC, PG, AXP, DD, KODK, BA
    Jun 03 12:18 PM | Link | Comment!
  • President's job creators really job losers. by Bill Gunderson
    The President's Job's Commission
    by Bill Gunderson
    Gunderson Capital
    Investment Advisor

    You might think the people on the President Obama’s job’s commission would know how to create jobs.

    Especially the CEO's.

    Not true. 

    They are job losers. Not job creators.

    Here are just a six companies whose CEO’s are advising the president on how to create jobs:

    GE: “At the end of 2000, GE employed 313,000 people, including 168,000 in the U.S. (54%). By the start of 2010, when the company filed its most recent annual report, GE had 304,000 workers, including 134,000 in the U.S. (44%).” (Barron’s.)

    In 2006, Intel employed 104,000. Today, 82,500.

    Today, Eastman Kodak employes 18,800 employees, down 20 percent from 2009. 

    Citigroup of course, received hundreds of billions in bailouts.

    And let’s not forget the two CEO’s responsible for what many say is the biggest business disaster in American corporate history, Steve Case, former CEO of AOL, and Steve Parsons, former CEO of Time Warner, both commission members.

    And these are the people advising the president on how to create jobs? 

    Their stock prices are just as bad.

     There are lots of people out there running companies creating jobs and making money: Here are a few: Autozone. Priceline. Tractor Supply. Panera Bread.  And lots more.

    But not one on the commission.

    May 26 1:05 PM | Link | 3 Comments
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