Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
Doug, I definitely do. Or rather, if not socialized medicine, then more widely distributed medicine via ACA.
I've forgotten the dialog back then, but wasn't that one of the key points? Wider healthcare coverage and increased consumption of healthcare is a benefit for companies like JNJ that supply this stuff to the hospitals and doctors that distribute it.
This might be one of the biggest premises upon which to construct a bullish, growth case for Johnson & Johnson.
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
The point is not that wealthy investors don't care about principal values (if anything, they care just as much or more, which is part of how they became wealthy investors in the first place).
The point is that we turn to stocks like JNJ for income, and unless you've got a whole lot of money, it's really difficult to generate meaningful income without eating into the equity.
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
A lot of Network Solutions UNIX-hosted sites are still down. Think first link in this piece doesn't work. So here's an alternate link for that article about inflation strategies.
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
Love this point.
We all write about these dividend stocks as though they were an academic endeavor. But you're absolutely correct, it's extremely difficult to make these things do what you want them to do with these kinds of yields.
Something to meditate on as we climb all over ourselves for 2 and 3% yields with no regard for principal...
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
True, and when you look at its valuation relative to next year's non-GAAP earnings, it's also around 15x. But 15x forward earnings is kinda expensive. As an example, Intel and Microsoft each give you similar dividends and are only around 10x forward earnings. Maybe JNJ is more of a growth company now, though?
That's why I also looked at EBITDA multiples. Those are on the high side as well.
Best Buy's Business Is Worth More Than You Think [View article]
Great question -- the rules for shorting are different than the rules for going long. Unfortunately, this is a question I don't really have an answer to, and specific short-selling is a field beyond my expertise. The only thing I know is what Doug Kass told me: "Never short a concept or a valuation. Short business models that are broken."
When I originally did this analysis, Best Buy was in the mid/high teens. I thought it was undervalued by 25-50%. We've had a 50% move since then. There's no way on the planet I'd initiate a new position based on any kind of fundamental thesis right now. But I'm also not sure I'd short it. I'd turn to a more authoritative voice than me on that one.
I was the guy who wanted to short Bitcoin at $100. :-)
Best Buy's Business Is Worth More Than You Think [View article]
Well, that sort of gets to the heart of their strategy.
If you could pay the same price at Best Buy that you could pay elsewhere (cheaper), then would you go ahead and buy it at Best Buy?
Assuming that's a yes, the top line at Best Buy is safe, or safer than it would be with no adaptation strategy. The question is how it impacts the bottom line.
Best Buy's Business Is Worth More Than You Think [View article]
Also: margins on extended warranties typically run 50-70%. I don't know exactly what they are at Best Buy, but they are a major profit center for the company.
I shouldn't be so critical of them. I was trained as economist and one of the things they do when you're taking upper division econ classes at educational institutions of world renown is take you into a dark room, plug a bunch of wires into your brain, and program you to categorically hate insurance policies of any and every form.
Dunno if they still do that, though, with economics curricula more friendly now to behavioral economics than they were when I was in school.
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
I've forgotten the dialog back then, but wasn't that one of the key points? Wider healthcare coverage and increased consumption of healthcare is a benefit for companies like JNJ that supply this stuff to the hospitals and doctors that distribute it.
This might be one of the biggest premises upon which to construct a bullish, growth case for Johnson & Johnson.
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
The point is that we turn to stocks like JNJ for income, and unless you've got a whole lot of money, it's really difficult to generate meaningful income without eating into the equity.
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
http://bit.ly/12TLyd5
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
We all write about these dividend stocks as though they were an academic endeavor. But you're absolutely correct, it's extremely difficult to make these things do what you want them to do with these kinds of yields.
Something to meditate on as we climb all over ourselves for 2 and 3% yields with no regard for principal...
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
That's why I also looked at EBITDA multiples. Those are on the high side as well.
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
Johnson & Johnson: 3 Things You Need To Know Before Buying At Current Levels [View article]
(I think that's also part of the reason why the price has been bid up so dramatically in recent months.)
Best Buy's Business Is Worth More Than You Think [View article]
Ex: Groupon
http://bit.ly/12HzgIw
When I originally did this analysis, Best Buy was in the mid/high teens. I thought it was undervalued by 25-50%. We've had a 50% move since then. There's no way on the planet I'd initiate a new position based on any kind of fundamental thesis right now. But I'm also not sure I'd short it. I'd turn to a more authoritative voice than me on that one.
I was the guy who wanted to short Bitcoin at $100. :-)
Best Buy's Business Is Worth More Than You Think [View article]
Best Buy's Business Is Worth More Than You Think [View article]
With that original target in the mid/low 20's, this whole article is on the brink of becoming irrelevant.
Sorry, everybody.
Best Buy's Business Is Worth More Than You Think [View article]
The stores are designed to attract that type of buyer. All the people who shop there don't necessarily fit that bill. It's a very successful model.
Best Buy's Business Is Worth More Than You Think [View article]
If you could pay the same price at Best Buy that you could pay elsewhere (cheaper), then would you go ahead and buy it at Best Buy?
Assuming that's a yes, the top line at Best Buy is safe, or safer than it would be with no adaptation strategy. The question is how it impacts the bottom line.
Best Buy's Business Is Worth More Than You Think [View article]
Best Buy's Business Is Worth More Than You Think [View article]
I shouldn't be so critical of them. I was trained as economist and one of the things they do when you're taking upper division econ classes at educational institutions of world renown is take you into a dark room, plug a bunch of wires into your brain, and program you to categorically hate insurance policies of any and every form.
Dunno if they still do that, though, with economics curricula more friendly now to behavioral economics than they were when I was in school.