CaptainJJack

Accenture: Poised to Grow

I own Accenture, and I regard it as a very solid company.

However, I have a stop-loss at $38, and I tightened it substantially over the last few days. I expect I may be out of it over the next few weeks.

While I like the company, at the current prices, I don't love the stock, and I've learned the hard way over the years, that there is a big difference between a company and a stock.

What leads this company's stock performance is the book to bill ratio, especially in consulting, and that has deteriorated with the economy. While the stock has had a huge run, it is mostly in improving multiples and was justified by the incredible ROE, in my opinion.

But, it is currently trading at over 8 times book, so ratios such as ROE or ROI, which are based on book value, are now close to meaningless as far as the stock price goes.

From everything I can figure out, the growth rates will be flat, with risk to the downside, and the stock is trading at around a 15 P/E. I figure it is pretty much fully valued until its prospects improve.

So, I have had a great run. I started buying at 28, and most of my buy was at 30. It may go to 40, but it may fall back. I put the odds at 50/50.

In general, I am very cautious about the next few years. While I consider Bernanke and Paulson to be heros for saving us from a depression, there are going to be downsides: there isn't any area of economic activity that isn't currently backstopped in one form or another by the government, and this cannot end well.

SO I am happy the market has recovered, but as my stock/bond ratios get above my objectives, I am a seller, not a buyer.