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Itzik12
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Hi, 7% for a year, that's a goal. and it's not easy goal. Form my perspective, only when you trying return solid you succeeded to do more. I'm working per value investments terms. I'm doing only several moves a year. I believe in history of the market and about economy is doing well at the long... More
  • Reasons To Consider Western Digital (WDC). 0 comments
    Apr 1, 2013 2:15 PM | about stocks: WDC

    A few weeks ago, while i was trying to locate some stocks to have, i use the phenomenal FINVIZ screener.

    Because this is my first post at "Seeking Alpha", i just want to tell a bit about the way i invest:

    The Graham way. To be honest, i used to invest in "Junk bonds" and it went well until it failed. So since the big fall in bonds i started to search for a better way to invest in stocks, so i came up with the "Intelligent Investor" by Ben Graham and I'm trying to read a lot about Warren Buffet way and moves.

    Anyway, let's go into it... into the reasons i believe WDC stock could be a good "Buy" stock.

    According to the Graham way of investment, i searched for stock which meats the requirements of Graham with bit changes i made to be more "comfortable" with the "Goal".

    Those are the parameters i searched for:

    1. Index: S&P500.
    2. Dividend: Positive.
    3. PE: Lower the 15.
    4. Return On Equity: Greater than 15.
    5. Debt/ Equity: Lower than 0.5
    6. Sales Growth in past 5 years: Positive.
    7. ROI: Greater than 15.
    8. EPS Growth this year: Positive.
    9. Current Ratio: Over 2.
    10. P/B: Lower than 2.
    11. EPS Growth past 5 years: Over 5%.
    12. ROA: Over 5%.

    It's not a secret: WDC at the higher price since 2006, But as i found out sometimes, it doesn't mean no new high can be reached.

    finviz.com/publish/040113/WDCc0ml1147.png

    For me, the most important parameter are: PB (1.47), PE (6.1) and the ROE (29.39%). But let's review the full answers of the 12 requirements above:

    1. Index: S&P500. (Yes)
    2. Dividend: Positive. (1.99%)
    3. PE: Lower the 15. (6.1)
    4. Return On Equity: Greater than 15. (29.39%)
    5. Debt/ Equity: Lower than 0.5 (0.26)
    6. Sales Growth in past 5 years: Positive. (17.94%)
    7. ROI: Positive. (24.7%)
    8. EPS Growth this year: Positive. (112%)
    9. Current Ratio: Over 2. (2.16)
    10. P/B: Lower than 2. (1.47)
    11. EPS Growth past 5 years: Over 5%. (21.4%)
    12. ROA: Over 5%. (19%)

    I prefer not to got deeply for each parameters, and just make sure if the stock is "Cheap". So i use the Multiple f PE & PB ratios and just make sure it's up to 22.5:

    PB (1.47) * PE (6.1) : 8.96

    This result is lower by far than Graham Maximum ratio of 22.5.

    I don't know why this stock is cheap. That's true. But if make a decision to invest in the market - i must to into account that i have some "Margin of safety:

    This can be found by the current "Earning Yield" which is 16.5%. (According to Graham way of work, only if this calculation is doubled than long terms AAA bonds it has a margin of safety.)

    The Debt to equity is only 0.26- which is good enough.

    Disclosure:

    I'm long on WDC.

    Disclosure: I am long WDC.

    Stocks: WDC
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