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  • Microsoft: 15% Upside Potential With Low Risk [View article]
    Its funny u say that. Yesterday, i was about to compare AAPL and MSFT in this article. Then I decided against it as there is little in common between the companies. In fact, my next article will deal with AAPL valuation.
    Sep 21, 2010. 03:25 PM | 1 Like Like |Link to Comment
  • Microsoft: 15% Upside Potential With Low Risk [View article]
    "FBR Capital analyst David Hilal today reduced his 2010 PC unit growth estimate to 16%, from 20%." That is still not bad considering that I have assumed a 7% growth rate.

    Further David continues to believe "that strong PC refresh cycle will play out through CY11 as enterprises need to replace their aging fleet of PCs."

    I dont see a doomsday for MSFT anytime soon. If you tell me that they wont grow as fast as they did in the 90s and early 2000s, then yes, I will agree. The way I look at it, MSFT has transitioned from a growth company to a value company.
    Sep 21, 2010. 02:54 PM | 1 Like Like |Link to Comment
  • Microsoft: 15% Upside Potential With Low Risk [View article]
    I agree with you. Multiples from earlier in the decade have little meaning today, which is why my multiple of 13 is based on the average of the last 3 years. From 2001 to 2007, the avg P/E for MSFT was approximately 31.

    During the last 3 yrs, MSFT routinely traded at multiples of 15-19. Considering that net income grew by 7% during the last 3 yrs (same as my projected future growth rate), I consider my price target of $29 (based on P/E 13) as a fairly easy price target for MSFT to attain.
    Sep 21, 2010. 01:23 PM | 2 Likes Like |Link to Comment
  • Who Is the Next Microsoft? [View article]
    What about a 3rd option? Neither!
    Sep 17, 2010. 03:56 PM | Likes Like |Link to Comment
  • Who Is the Next Microsoft? [View article]
    "and this time, I'm not letting the opportunity pass me by."

    Does that mean that you will be opening a position in the next few days? If so, what is your target entry price?
    Sep 15, 2010. 04:31 PM | Likes Like |Link to Comment
  • Evaluating Colgate-Palmolive [View article]
    I completely agree with you. I am just not comfortable with valuing companies assuming that they would grow their bottom line at twice the rate of their top line over an extended period of time. At the very least, I would assume that the company's operating margin would be in line with the sector's operating margin. Additionally, for a company as big and as mature as CL is, I would prefer a two-stage growth with the high growth period not lasting more than 5 years. In the case of CL, i would probably assume that the company would grow by 8% for the 1st 5 years and then grow by 4% into perpetuity.
    As you would probably agree, valuation is an art more than science and everyone has their own way of doing things. Kindly note that my comments above were strictly based on the information provided in this article. I have a fairly positive view of CL and I plan on adding it to my dividend portfolio.
    Sep 13, 2010. 05:22 PM | 1 Like Like |Link to Comment
  • Evaluating Colgate-Palmolive [View article]
    Let me play devil's advocate for a moment. A company growing its revenue at 4% cannot sustain an EPS growth of 10% or even 8% over an extended period of time. The EPS growth is probably the result of better operational efficiencies. They cannot indefinitely improve their operations. Once this happens, the EPS growth and revenue growth should be fairly similar. Therefore, a better way to analyze CL would be to assume an EPS 4% growth rate to match the revenue. EPS 2019 = 4.3*1.04^10 = 6.36

    Additionally, your table indicates P/E compression over the last 10-15 yrs. I would want to look at this trend a predict a P/E 10-15 yrs in the future. Based on the data you provided, it is easy to expect a 25-30% reduction in future P/E resulting in a P/E between 12 and 13.

    CL price = 12*6.36 = $77 or 13*6.36 = $83
    Sep 13, 2010. 04:31 PM | 2 Likes Like |Link to Comment
  • Hansen Natural: Quenching Thirst With Record Profits [View article]
    Alex, good catch. I am a little embarrassed that I dint know about this product. I will surely read about.

    On a side note, the valuation of HANS seems to be getting richer by the day. My price target of 54 was under the implicit assumption that the broader market would also appreciate in value. I might have to reevaluate HANS shortly to see if it makes sense to take some profits at this new 52 week high.
    Sep 8, 2010. 12:27 AM | Likes Like |Link to Comment
  • 3 Overlooked Value Investment Ideas [View article]
    Why would you assume an EPS of 0.43? The consensus is around 0.12.
    Aug 30, 2010. 11:27 PM | Likes Like |Link to Comment
  • BP's Gift to Investors: Cheap Energy Stocks [View article]
    I am not so sure about DO at the moment. They have, by far, the oldest fleet among the deepwater drillers. Management in the past had a policy of returning excess cash back to the shareholders as special dividends partly due to the pressure from Lowes which owns a ton of DO stock. I think using the money for upgrading the fleet would have been a better use of the cash.

    Disclosure: Long DO
    Aug 17, 2010. 01:32 PM | 2 Likes Like |Link to Comment
  • Hansen Natural: Quenching Thirst With Record Profits [View article]
    Chances are HANS will eventually be bought by KO especially since sales of Full Throttle are falling off the cliff. But I agree, over dependence on one brand is a big weakness. This is offset by the fact that the Monster brand has significant room to grow in the European, Middle Eastern and Australian markets. Plus, the company is trying to develop a good non-energy drink portfolio and the results are mixed in my opinion. The coffee business is still not there where I want it to be and the tea business is in its infancy.

    Alex, I did attend the conference call. The company did not talk too much about non-energy drink products. The monster brand will continue to be the major growth driver for the next few years. The tea segment, for example, is more like an add-on.
    Aug 10, 2010. 12:44 PM | Likes Like |Link to Comment
  • Diamond Offshore and Noble Corp: Drilling Profits [View article]
    Thanks huber.

    Unfortunately, I was not following those companies during the time period you mentioned. So I can only venture a guess. There can be several reasons for this outperformance.

    As you can see, the DO's earnings shot up from 2003 to 2006. The expectation for future growth was probably responsible for the price differential.
    Aug 11, 2009. 06:28 AM | Likes Like |Link to Comment
  • Thompson Creek Raises Production Guidance; Pullback Is Buy Opportunity [View article]
    Sorry about the confusion. I dont expect TC to report a lpss next year. I project a 2010 EPS of $1.10.


    On Jun 17 05:02 PM Mills17 wrote:

    > Nadeeem,
    > You seem very optimistic about TC's 2009 performance (even predicting
    > a higher EPS than most of the major analysts), but why do you see
    > 2010 as such a big loss? What will be different?
    > Mills
    Jun 17, 2009. 11:44 PM | Likes Like |Link to Comment
  • Corning: Better Days Ahead [View article]
    Thank you for commenting on the article.

    The estimates that I use are consensus estimates. I do not use estimates from a single source. For example, in the case of Corning, the estimates were an average of 18 analysts. I can assure you that all the 18 analysts do not and will not have a BUY rating on the stock at the same time. Also, I have access to only 1 analyst research report and he currently has a HOLD rating on the stock. Even if you assume that all the analysts have a BUY rating, the chances that they would have the same price target is remote. I like the idea of coming up with my own entry and exit points instead of relying on a single source.

    In performing my analysis, I first select stocks based on a certain criteria (see my profile for further details) and then I study the 10k filings and the annual reports. I also analyze the historical performance, company fundamentals, micro and macro factors and finally develop a multiple based on relative valuation analysis. At this stage I use the average analyst estimate to obtain my price targets.

    Aside from the points mentioned above, my articles basically serve as a means of saving my research and thoughts, and I am grateful to the SA Editors for offering me an opportunity to share them in public. I do respect your opinion and you have every right to disagree with my views.

    May 30, 2009. 10:21 PM | 2 Likes Like |Link to Comment
  • Coach: Time to Shop for a Handbag [View article]
    Based on S&P equity research, COH has a 20% marketshare in a $8.7 Billion luxury handbags ($100+ handbags) market.
    May 25, 2009. 10:36 PM | Likes Like |Link to Comment