Thanks for the comments. Mind, I believe we are currently in a deflationary environment, which has been the case since 2008. However, this may be altered quickly with the substantial printing of money by most of the governments around the world.
For Dividends#1, yes these indicators all turned negative in late 2007, nearly a year before the crisis. Of course, the usefulness of any indicator is based upon the economic period in question. In a 1970s scenario of high inflation, these specific indicators might not work as well. But in our current environment of high debt and low interest rates, I am of the opinion these are the top 6 available.
Pepsi: An Undervalued Consumer Giant [View article]
Thanks for all the commentary. For Lou Gray, I do not utilize debt in the equation for a valuation. It does not impact P/S in a direct manner, only secondarily as potentially higher debt to make acquisitions would enhance sales. As long as the firm has sizeable free cash flow and a high credit rating, the firm can service the debt. For debt, I always examine the times interest earned ratio for those firms with less stellar credit ratings. For vinchainsaw & mort, yes I did not discuss P/E ratio. Pepsi is trading at a forward P/E of 17 times 2013 estimates. It is in the middle of the firm's range. I don't necessary like P/E versus P/S as many items can skew the figures in my opinion. This includes capital expenditures & R&D, interest payments, etc. One firm that has a very high level of R&D and higher debt levels will have a higher P/E than another firm in the same industry. I thus believe Pepsi's P/E is inflated when adjusted for their own financial structure. Price/FCF is another better indicator. I have used that in some of my other analysis on SA. I did review FCF on an annual basis for Pepsi in the analysis piece. I felt FCF was generous. For the exact figure, Pepsi trades at just over 8% FCF yield per share, above the market average.
Merck: The Most Undervalued Company In Pharma [View article]
Siryeast7, yes BACE Inhibitor Drug MK-8931 from Merck is another pipeline product. I did not include it as I focused really on what I believe are the top 5 prospects for MRK. Competition is also a factor in my thought process. I think several other Alzheimer's drugs including Roche's gantenerumab and two from Eli Lilly (LY2886721 & solanezumab) have better prospects.
Merck: The Most Undervalued Company In Pharma [View article]
Thanks for the great thread of responses on Merck. CorvetteKid I think the CETP market is facing several issues. One, the failure of multiple lines of other CETP market has spooked investors. Two, with cost containment such an issue, generics are now promoted widely by large script provides such as Express Scripts and CVS. Three, the other class of new cholesterol drugs known as PCSK9 inhibitors. I think these new class of product has much potential as I wrote about in my thesis argument about Roche. Lastly, the question, does raising HDL artificially work? And if so, how bad will the side effects be? Thus, risk is high with CETP, and I think putting a $5 billion revenue line for a successful launch is generous..
Merck: The Most Undervalued Company In Pharma [View article]
CorvetteKid..... I am in agreement, Anacetracib is the best of the lot of the CETPs. It is promising that the trials have not been stopped yet and Merck management seems confident in a positive outcome. I think a $5 billion revenue line is most likely for Merck if they get through the tough FDA on this one. Its still a wild card for MRK. On purchase of Schering Plough, it has not worked out as planned, but still the cost savings generated in the deal has been quite significant. The IMPROVE it study will really determine whether or not the purchase is validated.
Merck: The Most Undervalued Company In Pharma [View article]
Bricius....Thanks for your detailed comments. Yes, I absolutely agree with your thesis that Merck has a poor history of R&D development. Any of those 5 pipeline drugs, or all, may not make it through to blockbuster status. However, my thesis for buying Merck is that Singulair generic is now behind the company with Januvia & Janumet picking up the slack along with accelerated emerging market growth from these and other products. Even with the horrible news with Tradaptive and the delay with Odanacatib, Merck's stock is still above the $38 level of last summer. I feel with the trough valuation on price/sales and a 4% yield, Merck has limited downside. But if one of more the these pipeline drugs goes through, a case for a move to the $50+ price level is strong.
Xilinx: Broad Portfolio And Strong R&D Are A Winning Combination [View article]
stu_s, it is also a catch up on valuation, as Altera has been more highly valued than Xilinx historically on a p/e and p/s basis. Altera trades at 6 times sales currently, where Xilinx is just over 4. Altera's sales have also fallen off in 2012 faster than Xilinx. Thus slower sales and a loftier valuation have worked against Altera in the past eighteen months vs. Xilinx. Tim
Xilinx: Broad Portfolio And Strong R&D Are A Winning Combination [View article]
stu_s, XLNX has outperformed Altera this year due to some market share gains and a quicker move to .28 chip specification. They seem to be winning about 70% of the dollar volume in the .28 market versus Altera.
Xilinx: Broad Portfolio And Strong R&D Are A Winning Combination [View article]
stu_s, thanks for the comment. All those areas have been weak on the industrial side for both Altera and Xilinx during 2012. I believe global growth will pick up in 2013, offsetting those concerns and areas of revenue for Xilinx. As for missing out on smartphones, Xilinx is actually benefiting from the growth area through LTE technology for 4G. Good point from gethigh. I agree highly with the energy efficiency and low power aspects of Xilinx chips, a trend within the industry that will continue over the next few years.
Thanks for the comments. Porkyboy........ Apache is not a classic high yield stock, just a fairly consistent dividend grower. My focus on investing in dividend growers is twofold. One, dividend growers have outperformed the market, as a class, over the preceding 39 years. I referenced this in my recent Zimmer stock article, here is a link; http://bit.ly/Uj56kU. Second, growing dividends by double digits over time demonstrates consistency of cash returns to shareholders by management. I actually prefer those firms that pay lower dividends but raise them faster than an old line firm that pays a very high yield, but with limited growth. On Wheatstone, yes it is a minority 13% interest, and most likely majority will rule. Kitimat is a true wild card at this point. I wanted to at least mention these LNG plays as it will be an area of big growth. Whether or not Apache can capitalize is still in question. But at the current valuation metric, Apache is very cheap.
For Jan Lessner, yes political risk in Argentina for Apache, but I believe there is less risk than Egypt, and revenue from Argentina for Apache is far less than the near 30% of cash flow Apache generates in Egypt.
Yes VDE on ticker for Vanguard. I don't follow MLP's as my universe of investments are primarily $10B in market cap and higher. Like TOT, but prefer RDS.A as the firm is leading a push in LNG. I do like SU in Canada. I should cover many of these candidates in upcoming articles.
Thanks Retired Colonel for finding my chart useful. For hhabana & Paulo, my favorite energy ETFs are the iShares S&P Global Energy (IXC), Vanguard Energy (VTE), and SPDR S&P International Health Care Sector (http://bit.ly/XtutoJ). You want exposure to international energy firms, so a combination of all three ETFs would accomplish this goal.
Thanks rjj1960 for your comments. I recommend you consider owning several large oil firms for diversification purposes. XOM and RDS.A happen to be two of my favorites. I don't recommend investors utilize put buying and selling strategies unless they are very sophisticated and can withstand substantial capital losses. My articles are meant for long term buy and hold investors.
Zimmer: A Strong Player In The Medical Device Industry [View article]
Thanks Beta_Adjusted for the comments. I don't follow companies south of $10 billion market cap, so I have not looked at Nobel or Sonova. Good notes on ZMH's kickback scandal. I did not cover this aspect as it was several years ago. Price pressure on the industry will continue to mount, but I feel ZMH's leadership position and strong dividend growth will continue to make it a solid investment selection.
Recessionary Indicators Remain Positive [View article]
For Dividends#1, yes these indicators all turned negative in late 2007, nearly a year before the crisis. Of course, the usefulness of any indicator is based upon the economic period in question. In a 1970s scenario of high inflation, these specific indicators might not work as well. But in our current environment of high debt and low interest rates, I am of the opinion these are the top 6 available.
Pepsi: An Undervalued Consumer Giant [View article]
Merck: The Most Undervalued Company In Pharma [View article]
Merck: The Most Undervalued Company In Pharma [View article]
Merck: The Most Undervalued Company In Pharma [View article]
Merck: The Most Undervalued Company In Pharma [View article]
Xilinx: Broad Portfolio And Strong R&D Are A Winning Combination [View article]
Xilinx: Broad Portfolio And Strong R&D Are A Winning Combination [View article]
Xilinx: Broad Portfolio And Strong R&D Are A Winning Combination [View article]
Apache: Risks Are Well Discounted [View article]
For Jan Lessner, yes political risk in Argentina for Apache, but I believe there is less risk than Egypt, and revenue from Argentina for Apache is far less than the near 30% of cash flow Apache generates in Egypt.
Thanks....... TM
Energy: A Compelling Sector To Own [View article]
Energy: A Compelling Sector To Own [View article]
Energy: A Compelling Sector To Own [View article]
Zimmer: A Strong Player In The Medical Device Industry [View article]
6 Key Recession Indicators [View article]