Jatin D. Shah

Jatin D. Shah
Contributor since: 2011
Company: NA
Sergey,
Long historical term sales and earnings growth is consistently positive. See http://bit.ly/JO2IVa
It is surprising that you are using S&P 500 P/E that is very overvalued according to many commentators to justify undervaluation of FTD.
Even you are right on a relative basis, if the stock market itself reverts to its expected valuation, your thesis will fall apart.
You have not provided any information about the reasons for earnings decline (global slowdown, poor management, labor problems, manufacturing issues, etc.).
Without understanding those reasons, I don't buy your argument that those earnings are bound to revert back to their historical norm and hence there is a potential upside.
You have not mentioned the biggest risk to Lorillard's business. 90% of its business comes from menthol cigarettes. FDA has banned all flavored cigarettes and menthol cigarette is the only one yet to be banned. FDA's new head of tobacco regulation appointed in February is outspoken opponent of menthol cigarettes.
We can debate whether FDA will eventually ban menthol cigarettes, but it is fair to say that this risk is not at all priced in the current market price of Lorillard.
It seems like Canadian Pacific shareholders are in favor of management change according to some independent polls.
http://bit.ly/GAv6nr
Yes - the risk that you mention exist, as they do with all such investing strategies. Personally, I'd be surprised if CP does not catch up to the industry and CNI on key operating metrics - whether it is due to Ackman/Harrison or something else.
I get your theory, but is it backed by data - should be easy to verify.
BTW, valuing high tech stocks using EV/EBITDA is very unusual. You will have missed all the great companies in the past several decades years using this approach - the airlines in 60s, MSFT in 90s, SBUX.
Paulo,
It is odd that you assume that two stocks in a sector are negatively correlated. Generally, it is the opposite for most industries and sectors.
Is this based on any historical analysis of high growth stocks post IPOs (say airlines in 1960s) or is it just your opinion?
Jatin
David,
Any thoughts on Citibank now that earnings has been announced? Citibank missed on both top line and bottom line.
Jatin
Corning had designed Gorilla Glass in 1960s, but had stopped production as there was no use for it. Steve Jobs made Corning restart manufacturing of Gorilla Glass for iPhone.
Gorilla Glass is definitely used in Apple products - it is even mentioned in Steve Job's recently released biography. Though I am sure Apple is now using multiple vendors for this type of glass.
Corning is going to announce Gorilla Glass 2 at CES next week. Even though Corning has competition, it has the innovation edge and will remain a leading manufacturer of alkali-aluminosilicate sheet glass.
Link:http://bit.ly/zXWUEq
Thanks. I will definitely cover Corning and their other business lines in more detail soon.
Mistake: As per Cramer's comments, ETN should be bullish (not bearish)
Exactly wrong way of thinking. I am hardly representative of average Indian, so anecdotal evidence does not count. Business process outsourcing gets a lot of press in US media, but is not major driver of Indian employment (0.1% of Indian jobs by some estimate & 5% of GDP).
That said, global markets are increasingly interdependent on each other - so don't disagree with that claim. But there is no basis for saying that business outsourcing is primary driver of Indian employment or even Indian economy.
Reference for GDP/employment numbers: http://bit.ly/utGMBJ
Your data is not accurate. Business process outsourcing is a very small portion of total Indian GDP & employment - 5-10% by some estimates
I am using just the float - not outstanding shares in my analysis. In effect, I am assuming that closely held shares are worth nothing and in any liquidation they would not be paid anything.
Lowell,
Have you tried testing the software's prediction using historical data? Use 2006's market prices for your ETF and then compare the predicted 5 year return from 2006-2011 with the actual return.

Given our general understanding of predictive analytics and given the exceptional market circumstances since 2009, I'd be very suspicious of any prediction system that can make long term predictions (say 5 year+) based on just three years of data.
Jatin
Are you using historical data from 2008-2011? That is a bull market for bonds. Is it a long enough historical period of make a fair assessment of this portfolio's risk/return characterisitics?
Netflix has definitely failed in communicating their product changes to its users and business plan with their investors. That said, it is still a great company, strong brand and full of very talented employees - with strong history of executing on innovative products.
There is a vast difference between executive leadership of Netflix and those of other media distribution players like Borders and Blockbuster
Very comprehensive coverage of origin of BRIC acronym.
On a related note, there is a great article in Wall Street Journal on the next six countries after BRIC: Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa - CIVETS. It will be interesting to follow them over the next decade.
Here is the link to the article: http://ow.ly/6ByXC
The promise of Google Wallet like technologies has been well known for a while now. Their success depends on its adoption by vendors & retailers - a big unknown especially given that Google has not been able to truly disrupt other players in the local space like Yelp.
That said, the current point of sale systems are ready for disruption. Like televisions, they have been unchanged for a long time now.
@Blue Horse Shoe
Your statement is not a counter to the fact that AAPL has largest market cap. What this fact (AAPL higher market cap than XOM) means for future returns of the company is a completely unrelated matter.
With introduction of LTE and WiMaX by wireless providers, we can expect some competition between broadband internet providers.
Users will finally have a real alternative to broadband access currently provided by cable companies. That might lower prices of broadband internet
Indeed, HP is very cheap on all key measures. I'd say that the current management changes have been unfortunate, but it is going to get back on track soon.
Press often overstates the problems and role of CEO and top management in running of a large company.
Carl-Peter Forster, CEO of Tata Motors recently resigned. It is never a good sign when such things happen. Car sales are slowing in India with its Nano barely selling 900 units a month. And Indian rupee falling to all time lows compared to US dollar will affect exports.
I am very skeptical of Tata Motor's business in the near term.
Good article. You have captured the macro situation quite well.
For the long-term investor with horizons longer than 5 year, this is an opportunity of a life-time to purchase stocks on the cheap. P/E multiples on some blue chip companies are very low (in some cases less than 8).
Windows 8 is still in early preview stage, Windows 7 Mobile (with similar Metro UI) has not seen much uptake and recent Windows releases have been either failures (Vista) or lukewarm successes (Windows 7 Desktop)
By 2012 iPad (and even an Android tablet) will have significant lead over any new upcomer. Even Web OS tablets by HP did not stand a chance against the iPad
Success of Windows 8 is far from certain. Qualcomm, ARM are great companies and will likely do well on their own. Whether it will be because of Windows 8 is not at all clear.
Jim,
How did you get the 10.50%-14.50% annualized return range for SBUX? I don't see the analysis in the article.
Here's an excellent analysis of one of the stock mentioned in this article, AVX Corp. by Frank Voisin, a well regarded value oriented analyst.
www.frankvoisin.com/20.../
Yes, agreed. NCAV includes total liabilities and so it is always less than book value. However, in the table NCAV is shown on a per float basis while book value is computed using outstanding shares.
I have used the following screen from the Graham Investor website to generate the recommendations: www.grahaminvestor.com.../
The calculations in the table are correct. Book value includes PPE and long term debt, so can be more or less than NCAV.