The Ethical Investor

Long only, deep value, contrarian, growth at reasonable price
The Ethical Investor
Long only, deep value, contrarian, growth at reasonable price
Contributor since: 2009
Yes, I do like it at the $8.50 level. However, although I do not like timing the market, the stock should retreat to under $8 and I dont recommend chasing the stock at $8.5. This is a longer term play and there is some time to establish a position in the stock.
$6.23 per tablet; $12.5 per day. 12.5*365 = $4,500 approximately. NVS has provided the cost guidance.
Thank you for pointing out the error. I have initiated the process for getting it fixed. The yields are from last week. However, GSK and SNY were completely in incorrect because of a formula issue in my file.
I agree with you. The company is a well run. Most of the stocks I analyze have to pass the "well run" test. Once I am sure that the business can be a legitimate going concern, I take it up for valuation to determine if it is worth owning at current levels. A stock can be a great company, but a lousy investment if you overpay for it. Thanks for your comment.
My age and investment horizon should not matter to you. Looking at my projections, if you agree with them, you should be able to make up your mind whether you are OK holding the stock or selling it. Caveats are implied.
I concur, JNJ is not an obvious short. There are several other opportunities available. My article was more about booking some profits here and not adding to/opening new position at current levels.
I agree. It boils down to philosophy. And yes, JNJ is part of a basket of stocks I would sell at current levels.
The trailing P/E is of no consequence to me as I have performed absolute valuation. My sell rating is not based earnings multiple
I understand your position. Your investment objectives are very different from mine. In my situation as a person 30 years away from retirement, I would take some money off the table and wait for a pullback to buy more.
the forward P/E is a fair point to make. But when the whole market is expensive (which I think it is), relative valuation is not the best valuation technique in my opinion. The growth rates that I have assumed account for the drugs in the pipeline. Without those drugs, I would have assumed a declining growth rate in real terms.
JNJ might appear like a great opportunity to you, but from I stand, it appears overvalued. This is my personal opinion which I am just sharing with the rest of the community. Thank you for your constructive criticism.
Thanks for bringing it to my attention. The error has been fixed.
This is strictly a quantitative analysis. The growth forecasts are based on average analyst estimates. CLF is expected to increase its EPS by 27% this year followed by flat earnings growth. If you think that the estimates are incorrect, you can change the future EPS forecasts and apply a suitable P/E. You can always refer to my discount rate if you so desire.
Thanks,
I agree. Equity and capitalization are two very different things. I have already asked the editors to fix the issue.
The Lt D/E for SE is correct. Lt Debt of 10,146 and equity of 8,323 gives you approximately 122%. In any case, those numbers do not have a meaningful impact to the valuation. Plus, you can always adjust the model to your liking by changing the inputs used. The analysis is very transparent.
Yes, the stock is up 118% over last yr. That is a typing error.
I apologize.
The d/e ratio used is the long term debt to equity. I do not use cash as a negative debt.
Thank you for the compliment. I was waiting for the $475 levels. I doubt the stock will get there though.
Thanks Finian for the reply. I used to hold a similar view which is why I was long AIXG till a few hours ago. For the company to be a profitable investment, the EPS will have to rise back to $1.89 (2010 levels). Based on the projected growth rates, I really do not see that happening anytime soon. I think there are better opportunities elsewhere to make money.
A better opportunity to get out?
Thank you for the reply. I agree that AIXG is not like the other firms (with the possible exception of VECO). I have presented the other firms for comparison and paid little weight to the other companies to project the future P/E.
Actually, I am presenting the historical trends and using future outlook to come up with my valuations.
Yes, I never claimed otherwise.
Because i m more confident abt the relative valuation.
If you do not like betting against GS, you could always follow GS into A and ADSK.
Hey, thanks for the comment. The purpose of the article to find out if it makes sense to follow goldman in these stocks. You are right, NOK might be a speculative play for Goldman, but when I buy a stock, I plan on holding it for approximately 5 years. My analysis is based on that implicit assumption.
Yes, i did..Not in the analysis shown above. I did a residual in come based valuation which primarily uses the book value. the valuation estimate for SIRI is lower than the one shown above.
People, I have no vested interest in the stock. In fact, I do not short stocks...ever. If I had, it would be mentioned in the disclosures. This article is in response to a request made by one of my followers who was interested in the company. I have never had interest in the firm and have therefore not analyzed it in the past. I do not expect everyone to accept the results of my analysis. If you think that SIRI is undervalued, then by all means go ahead and buy the stock or hold on to it.
If I was really after page views, I would have written a bullish article on SIRI, not a "short" one. A few page views do not make a material difference to me.
Homer985, thanks for your thoughtful points. I have indirectly accounted for the the NOL and all other assets of the company. This is earnings based relative valuation. The EPS and the growth rates take care of the NOL, deferred revenues etc. I was performing an absolute analysis, then I would have explicitly considered these points.
Thanks for pointing that out. The original number in the article was base revenues. We have now updated the revenue number.
I am more concerned about the rapid increase in share price. I think that the fundamentals do warrant and support the current price. But when was the market rational? I would also wait to buy stock. A decent pullback would be welcome.
Thanks.
Thanks for adding me to that list. But if you notice, I was actually looking at his long picks as I almost always am a buyer of equities, not a short seller.