Time To Bet On Housing: Toll Brothers Is A Great Option [View article]
While your data is important, I would also look at the National Association of Realtors home price affordability index which is hitting new highs. Something has to give and when both your metric and my metric are reaching new levels. I would argue that both of our data points suggest more individuals are going to be buying homes in the future.
Time To Bet On Housing: Toll Brothers Is A Great Option [View article]
You correct that $1.04 billion of land is categorized as inventory for future communities. However you are incorrect about them purchasing this prior to the housing crash. If you look back at earlier 10-k filings you can see that in 2008 land owned for future communities $819 million, in 2009 that decreased to $775 million. Additionally if you look at impairment charges during that period you will see that "land owned for future communities" was impaired by $404 million in 2007, $144 million in 2008, and $169 million in 2009.
Using GAAP financial statements you cannot reverse impairment charges, so I would assume that land for future communities has been drastically written down (and then expensed properly). This also leads me to believe that the company sees opportunity and is now purchasing property which is why the inventory component of future communities has been increasing.
Stan, You make a very good point regarding historical price multiples. Given the current slowdown in North America the company may be deserving of this lower multiple.
However my argument lies with the growth of China, other emerging economies and the Mens stores. If you begin to model out these segments and see the impact they may have on earnings in the years to come, one could argue that Coach is just taking a breather. Hence my reference to the "transition year", the company appears to be building itself for the future.
Additionally, if competitors begin to fall out of style with consumers (as I feel they will), Coach stands to gain back that market share. The company has been around for decades and has proven its ability to be a lasting brand.
What's In Store For Apple Investors In FY13 [View article]
rich,
First let me thank you for being the first to post a comment regarding my article and not your own thoughts on why Apple is great/sucks. You make a very good point about what 2014 and beyond may hold. I think the company can keep the earnings growing by large scale share repurchases. I know some may argue that this is not "organic" growth, but what else are you to do with such a large cash pile? The cash is becoming a drag on performance and given the extremely low valuation, it appears to be a rather favorable entry point.
In the event the company needed cash to invest in other projects, the debt market would likely treat them very kindly given the pristine balance sheet and tremendous operating cash flow.
Thomas, You make a good point regarding the low levels of operating cash flow. One point I would urge you to consider is the point on the business life cycle that Under Armour currently operates. They are still rapidly expanding and one characteristic of these companies can be lowered operating cash flows due inventory purchases and extending credit to new customers (a great way to promote your brand). Both of these situations apply directly to Under Armour over the past few years. Regarding your point about products manufactured overseas, I tend do invest based upon profitability, not product manufacturing location. I have never heard of a stock going down because they found a way to control costs.
You make a great point about factoring in capital reserves. I certainly think that these should be taken into consideration when evaluating a company, but it should be noted that these are one time events and not a part of normal business operations. If I am buying a company today, I am concerned with their earnings power in the future. Skype will no longer add to the bottom line so I don't want to factor that into my projections. To analyze the growth trend of eBay's core businesses you need to strip out irregular income statement line items. Thanks for your comments and for pointing out the typo error, I will have that corrected.
Green Mountain Coffee: Bet Against The Herd [View article]
Coffee234, Thanks for the comments. As I mentioned above the line-up of coffee that Green Mountain distributes has a tremendous opportunity to reach various vendors (hotel/hospitality included). Starbucks will only be selling one brand, and that may turn some customers away.
doc, Thanks for your comments. As I mentioned in the last paragraph in my article, if you want a higher growth stock, Apple would be the one for plus-sized returns. I think Apple is an great company to own and agree with you about the very low valuation. However it doesn't take an "otherwise educated so call analyst" to understand the benefits of diversification within your portfolio. If you are only investing in one stock, Apple, then don't be surprised to see your portfolio experience some serious volatility down the road. If you are looking to build a portfolio of high quality securities then maybe you should consider adding IBM to your mix.
Jon, You make a very good point about slowing revenue growth, however given the slowdown in economies worldwide this is somewhat expected. If you get an increase in business confidence from Europe and corporations begin spending you will likely see a bump in revenue as orders that were "put off" due to the uncertain future, begin to filter in. Additionally I think as emerging economies grow the need for improved technology will benefit IBM's top and bottom line in the years ahead.
Book Review: 'Financial Statement Analysis: A Practitioner's Guide' [View article]
I am just about to finish reading this book and would certainly recommend it to anyone who wants to dive deeper into financial statement analysis. I do agree with Chris's last paragraph in which he describes the book as somewhat elementary to sophisticated security analysts. However don't let that discourage you from reading, there is certainly a lot to learn in the text.
Mobile Commerce And Why You Need To Own eBay [View article]
chippy, Thanks for your comments. You make a great point, StubHub is a tremendous growth opportunity for eBay. They have a very compelling marketing campaign that makes them appear the "safe" place to buy and sell tickets. Watch for StubHub to give a boost to earnings as football season begins.
Great points made in your article. Toll is certainly a "best of breed" homebuilder and I think your article points towards the quality management team in place. I believe the volatility this stock has exhibited over the past few months offers investors great entry points to get long TOL.
Lululemon's Growth Story Remains Intact [View article]
Michael,
Thanks for your comments. 30x plus is certainly high, however I believe if the company can overcome this issue and continue to grow at a relatively high rate, it appears the market will award the stock accordingly.
Lululemon's Growth Story Remains Intact [View article]
Seth, Thanks for your points, all very relevant and certainly important to consider when evaluating LULU. I have reduced my same store sales estimates and share that same thought process with you, however the company is going to open a record amount of stores this year and still has room to expand domestically. Bottom line growth still has the potential to grow significantly which is why I still like the stock. Hopefully we get a brief pullback in the price.
Time To Bet On Housing: Toll Brothers Is A Great Option [View article]
David Guarino
Time To Bet On Housing: Toll Brothers Is A Great Option [View article]
Using GAAP financial statements you cannot reverse impairment charges, so I would assume that land for future communities has been drastically written down (and then expensed properly). This also leads me to believe that the company sees opportunity and is now purchasing property which is why the inventory component of future communities has been increasing.
David Guarino
Don't Give Up On Coach Just Yet [View article]
You make a very good point regarding historical price multiples. Given the current slowdown in North America the company may be deserving of this lower multiple.
However my argument lies with the growth of China, other emerging economies and the Mens stores. If you begin to model out these segments and see the impact they may have on earnings in the years to come, one could argue that Coach is just taking a breather. Hence my reference to the "transition year", the company appears to be building itself for the future.
Additionally, if competitors begin to fall out of style with consumers (as I feel they will), Coach stands to gain back that market share. The company has been around for decades and has proven its ability to be a lasting brand.
Thanks for your comments.
David
What's In Store For Apple Investors In FY13 [View article]
First let me thank you for being the first to post a comment regarding my article and not your own thoughts on why Apple is great/sucks. You make a very good point about what 2014 and beyond may hold. I think the company can keep the earnings growing by large scale share repurchases. I know some may argue that this is not "organic" growth, but what else are you to do with such a large cash pile? The cash is becoming a drag on performance and given the extremely low valuation, it appears to be a rather favorable entry point.
In the event the company needed cash to invest in other projects, the debt market would likely treat them very kindly given the pristine balance sheet and tremendous operating cash flow.
Thanks for your comments,
David
Under Armour: An Investor's Guide [View article]
You make a good point regarding the low levels of operating cash flow. One point I would urge you to consider is the point on the business life cycle that Under Armour currently operates. They are still rapidly expanding and one characteristic of these companies can be lowered operating cash flows due inventory purchases and extending credit to new customers (a great way to promote your brand). Both of these situations apply directly to Under Armour over the past few years.
Regarding your point about products manufactured overseas, I tend do invest based upon profitability, not product manufacturing location. I have never heard of a stock going down because they found a way to control costs.
Beware Of eBay's Drop In EPS [View article]
Thanks for your comments and for pointing out the typo error, I will have that corrected.
Green Mountain Coffee: Bet Against The Herd [View article]
Thanks for the comments. As I mentioned above the line-up of coffee that Green Mountain distributes has a tremendous opportunity to reach various vendors (hotel/hospitality included). Starbucks will only be selling one brand, and that may turn some customers away.
IBM: Portfolio Anchor Stock [View article]
Thanks for your comments. As I mentioned in the last paragraph in my article, if you want a higher growth stock, Apple would be the one for plus-sized returns. I think Apple is an great company to own and agree with you about the very low valuation.
However it doesn't take an "otherwise educated so call analyst" to understand the benefits of diversification within your portfolio. If you are only investing in one stock, Apple, then don't be surprised to see your portfolio experience some serious volatility down the road. If you are looking to build a portfolio of high quality securities then maybe you should consider adding IBM to your mix.
IBM: Portfolio Anchor Stock [View article]
You make a very good point about slowing revenue growth, however given the slowdown in economies worldwide this is somewhat expected. If you get an increase in business confidence from Europe and corporations begin spending you will likely see a bump in revenue as orders that were "put off" due to the uncertain future, begin to filter in. Additionally I think as emerging economies grow the need for improved technology will benefit IBM's top and bottom line in the years ahead.
Book Review: 'Financial Statement Analysis: A Practitioner's Guide' [View article]
Mobile Commerce And Why You Need To Own eBay [View article]
Thanks for your comments. You make a great point, StubHub is a tremendous growth opportunity for eBay. They have a very compelling marketing campaign that makes them appear the "safe" place to buy and sell tickets. Watch for StubHub to give a boost to earnings as football season begins.
Toll Brothers' Crystal Ball [View article]
-David Guarino
Lululemon's Growth Story Remains Intact [View article]
Thanks for your comments. 30x plus is certainly high, however I believe if the company can overcome this issue and continue to grow at a relatively high rate, it appears the market will award the stock accordingly.
-David Guarino
Lululemon's Growth Story Remains Intact [View article]
Thanks for your points, all very relevant and certainly important to consider when evaluating LULU. I have reduced my same store sales estimates and share that same thought process with you, however the company is going to open a record amount of stores this year and still has room to expand domestically. Bottom line growth still has the potential to grow significantly which is why I still like the stock. Hopefully we get a brief pullback in the price.
-David Guarino
Heico: Small-Cap Stock Growing Through Acquisitions [View article]