The Right Way To Evaluate Apple: Divide By 10 [View article]
I love AAPL products and their growth story. That being said I don't know if buying their stock now makes much sense. It's hard to outperform the market when you are the market.
Gilead's Electron Data Brings Some Reality Back To The Hep C Market [View article]
Also I would add (just because I've been reading a Ken Fisher book) that the only reason to make a market bet is if you know something the market doesn't know or isn't appreciating.
So the only reason to buy GILD here is if you are reasonably certain the market is wrong and this is a temporary blip. If you are certain of that buy GILD, I'm not so I won't be doing that. I will be selling VRTX once they are fairly priced though, give me 42-45 a share and I'm done.
Gilead's Electron Data Brings Some Reality Back To The Hep C Market [View article]
I wouldn't be so quick to snap up GILD. What this incident demonstrates is the inability of big pharma to make good on their growth through aquisition model.
The fact that they paid nearly 1/3 their market cap for a drug candidate and the first study throws cold water on it makes me wonder what other undesirable surprises may lie in store. The market is not over reacting if 7977 doesn't work out.
I went long VRTX for 30 bucks a share, it seemed like a good contrarian bet when everyone was salivating at these unproven drugs. I work in the pharmaceutical industry and let me tell you one in the hand is worth ten in the bush.
AutoZone: Skewed Probability Towards The Upside [View article]
I have to say this sector looks very good. Any thoughts about other companies? I was thinking about going long on AAP, but in waiting for an entry point the stock has gone up 10%. I'm a bit gunshy on buying something so overbought and near the top of its P/E range.
I had passed on AZO over concern over the negative book value. I'm also not a big fan of buy backs, to me they signal management doesn't have a good place to invest capital and if that's the case I wonder why I should buy the stock. Wouldn't it be better if they used the money to expand their business?
Maybe it's just the long term investor in me, but selling now seems foolish. Bull markets end not with a bang, but with a whimper. I wouldn't sell until you see a couple months of sideways trading. I'm done buying at this point, but it's not time to sell either. Once we break last years highs the next leg of the rally will begin.
Do you have any data to back that statement up? Statistically equities perform significantly better when government debts are high. Previous peak deficit years include: 1942, 1982, 1992, 2003, 2009. All excellent times to buy stocks.
Don't Buy Into Telefonica's Valuation [View article]
Really, you would sell them at the very bottom of their trading range for 12.5x their 10 year trailing earnings? I can see not buying them, there may be better investments out there.
Having gone through the data if you didn't tell me the price and just showed me income/balance sheet and cash flow I would have to expect the stock would trade for at least 20 bucks a share. That's not just chasing dividends, honestly their cash flow and earnings look healthy to me. Not perfect, but pretty good.
If the company is really in trouble please enlighten me, but saying they are in trouble simply because the share price has gone down is silly. I wouldn't have rushed to buy them for 25 a share, but for under 17 I'll think about it.
I will bet you a 3-5 year investment will give you 10% in dividend yield plus 5-10% annual appreciation. You will have to be patient, but they will turn around eventually and when they do the price will go back to 25 a share. That will be the time to sell when most people think it's safe to buy again.
Don't Buy Into Telefonica's Valuation [View article]
I have to say the more I read here and the more TEF and FTE's prices go down the more I think they are great buys.
Diesel, I have a question about your normalized P/E ratio. How many years is this over? Is it a 5 year average P/E - you don't say in the article.
I really don't understand why these stocks are so oversold. I mean the situation in Europe is bad, but FTE and TEF are selling below where they were in the financial crisis. Am I missing something or is the market in complete overreaction group think mode?
Um comparing equity pricing at the highest point of the dot com bubble would always make stocks appear cheap.
22x 10 year trailing earnings ain't cheap. It's 25% more than average. Of course stocks have been recklessly overpriced since 95 with the exception of early 09 and that never stopped us from bidding them up before.
But with bond yields so low and cash at nothing there's really no other game in town.
Well FSLR is certainly acting like a stock that has absorbed all the bad news. Just be ready for wild gyrations in price on rumors and innuendo. I doubt that solar will ever be a large part of the supply of electricity, but I would think there should be some market for it.
Is there anything proprietary about their thin film? Why is it that a Chinese firm can't just imitate their technology?
It's worth thinking about, but I would wait for the stock to get into the mid-30s before making a move. This years earnings are clearly a disaster and I don't see how they are going to command a P/E of much more than 10x until there is more certainty about their future. Why the stock price hit 50 last week is beyond me.
I think you need a little more analysis here to convince me.
FSLR is trading below book value and there isn't much on their balance sheet that doesn't seem solid and no debt. So that's a plus.
However, they are going through a major strategy shift. They are going from producing smaller units to organizing larger solar farm projects. Can they compete against fossil fuels and grow? And why are they better positioned than the dozen or so Chinese solar firms?
To get me to invest in something like this I really need to think it's an industry that will grow strongly and outperform the market, otherwise it just isn't worth the risk. And I need to know why this particular company is so exceptional.
I also think a word of advice is warranted here. Buying companies below book value may seem like a good idea. In Buffett's day good companies became available at that price. Today you may find some good companies during a bear market, but in today's market buying a company below book value means one thing: the market thinks they are going out of business.
You're not likely to get rich by buying companies on the verge of bankruptcy.
Yeah it's tough not getting a 3% dividend when the stock price doubles every other year.
I don't deny that a value investor might have a different take on AAPL, however, you have to adjust their book value by the R&D a company would have to do to reproduce apple's product. It's also very paranoid not to view their incredible growth as a margin of safety.
I'm sure the adjusted book (or the cost to build a company capable of competing with AAPL) is much more than 85/share. Apple's growth would easily command double their adjusted book. A total guess on my part is about 400 a share, so at 400 a share AAPL is a great deal. Maybe now it's a slightly above average deal.
I'm sorry you can value a coal company by book value, but you can't reasonably value the best technology company on the planet with such a simple metric. Go buy some RIMM if you want book value, I'll stick with AAPL.
Weighing The Week Ahead: Time To Reconsider The Upside For Stocks? [View article]
Yeah, Dent went on Bloomberg and predicted Dow 5000 in the next year or two. Let's hope he will turn out to be just as wrong about Dow 5000 as he was about Dow 20000 a decade ago.
A little summer panic and all the crazies come out of the woodwork. Oh and housing is going to go down another 50%. I guess it gets him attention, he cares more about that than accurate forecasting.
The Right Way To Evaluate Apple: Divide By 10 [View article]
Gilead's Electron Data Brings Some Reality Back To The Hep C Market [View article]
So the only reason to buy GILD here is if you are reasonably certain the market is wrong and this is a temporary blip. If you are certain of that buy GILD, I'm not so I won't be doing that. I will be selling VRTX once they are fairly priced though, give me 42-45 a share and I'm done.
Gilead's Electron Data Brings Some Reality Back To The Hep C Market [View article]
The fact that they paid nearly 1/3 their market cap for a drug candidate and the first study throws cold water on it makes me wonder what other undesirable surprises may lie in store. The market is not over reacting if 7977 doesn't work out.
I went long VRTX for 30 bucks a share, it seemed like a good contrarian bet when everyone was salivating at these unproven drugs. I work in the pharmaceutical industry and let me tell you one in the hand is worth ten in the bush.
AutoZone: Skewed Probability Towards The Upside [View article]
I had passed on AZO over concern over the negative book value. I'm also not a big fan of buy backs, to me they signal management doesn't have a good place to invest capital and if that's the case I wonder why I should buy the stock. Wouldn't it be better if they used the money to expand their business?
Mr. Market Is Cheery, For Now [View article]
Things look good, don't outsmart yourself.
2008 All Over Again? [View article]
Don't Buy Into Telefonica's Valuation [View article]
Having gone through the data if you didn't tell me the price and just showed me income/balance sheet and cash flow I would have to expect the stock would trade for at least 20 bucks a share. That's not just chasing dividends, honestly their cash flow and earnings look healthy to me. Not perfect, but pretty good.
If the company is really in trouble please enlighten me, but saying they are in trouble simply because the share price has gone down is silly. I wouldn't have rushed to buy them for 25 a share, but for under 17 I'll think about it.
I will bet you a 3-5 year investment will give you 10% in dividend yield plus 5-10% annual appreciation. You will have to be patient, but they will turn around eventually and when they do the price will go back to 25 a share. That will be the time to sell when most people think it's safe to buy again.
Don't Buy Into Telefonica's Valuation [View article]
Diesel, I have a question about your normalized P/E ratio. How many years is this over? Is it a 5 year average P/E - you don't say in the article.
I really don't understand why these stocks are so oversold. I mean the situation in Europe is bad, but FTE and TEF are selling below where they were in the financial crisis. Am I missing something or is the market in complete overreaction group think mode?
A Perfect Storm For Lead Economic Indicators? [View article]
Barron's Latest 'Dow 15,000' Issue: Cover Indicator At Work? [View article]
22x 10 year trailing earnings ain't cheap. It's 25% more than average. Of course stocks have been recklessly overpriced since 95 with the exception of early 09 and that never stopped us from bidding them up before.
But with bond yields so low and cash at nothing there's really no other game in town.
First Solar A Long-Term Play [View article]
Is there anything proprietary about their thin film? Why is it that a Chinese firm can't just imitate their technology?
It's worth thinking about, but I would wait for the stock to get into the mid-30s before making a move. This years earnings are clearly a disaster and I don't see how they are going to command a P/E of much more than 10x until there is more certainty about their future. Why the stock price hit 50 last week is beyond me.
First Solar A Long-Term Play [View article]
FSLR is trading below book value and there isn't much on their balance sheet that doesn't seem solid and no debt. So that's a plus.
However, they are going through a major strategy shift. They are going from producing smaller units to organizing larger solar farm projects. Can they compete against fossil fuels and grow? And why are they better positioned than the dozen or so Chinese solar firms?
To get me to invest in something like this I really need to think it's an industry that will grow strongly and outperform the market, otherwise it just isn't worth the risk. And I need to know why this particular company is so exceptional.
Apple Jumps, Is It Time To Bail? [View article]
You're not likely to get rich by buying companies on the verge of bankruptcy.
Apple Jumps, Is It Time To Bail? [View article]
I don't deny that a value investor might have a different take on AAPL, however, you have to adjust their book value by the R&D a company would have to do to reproduce apple's product. It's also very paranoid not to view their incredible growth as a margin of safety.
I'm sure the adjusted book (or the cost to build a company capable of competing with AAPL) is much more than 85/share. Apple's growth would easily command double their adjusted book. A total guess on my part is about 400 a share, so at 400 a share AAPL is a great deal. Maybe now it's a slightly above average deal.
I'm sorry you can value a coal company by book value, but you can't reasonably value the best technology company on the planet with such a simple metric. Go buy some RIMM if you want book value, I'll stick with AAPL.
Weighing The Week Ahead: Time To Reconsider The Upside For Stocks? [View article]
A little summer panic and all the crazies come out of the woodwork. Oh and housing is going to go down another 50%. I guess it gets him attention, he cares more about that than accurate forecasting.