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Snoopy1

Snoopy1
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  • Chewing The 'CUD' On General Motors [View article]
    Not only that, but GM won the J.D. Powers Quality Survey and the Cadillac CTS and Chevy Vette won 2013 Car of the Year trophies.

    GM should be in the high $40s in a year, which is quite good. If you look at the Q4 13F filings, many of the world's smartest investors were buying GM at prices slightly higher than today.
    Feb 20 02:57 PM | 4 Likes Like |Link to Comment
  • ModernGraham Annual Valuation Of Starbucks Corporation [View article]
    Even Morningstar has a $78 fair value for SBUX shares and they often underestimate value for growth companies. For what it's worth, the median sell-side 1-year target is $90 (my target is $82.50).

    SBUX isn't cheap but it seems to have a strong franchise/moat and many years of growth. I recently bought a starter position at $70.90 and will buy if it dips lower as I am unwilling to buy large cap growth stocks over 25x forward P/E.
    Feb 20 01:23 PM | Likes Like |Link to Comment
  • Facebook buying WhatsApp [View news story]
    True, but what else is FB going to do with the cash - earn 1% or buy back their own overpriced stock? :-)
    Feb 19 06:11 PM | 2 Likes Like |Link to Comment
  • More on Facebook/WhatsApp [View news story]
    I agree. The fact that FB had to buy WhatsApp shows how fragile the FB business model is.
    Feb 19 06:07 PM | 5 Likes Like |Link to Comment
  • MasterCard and Visa press on with mobile payment technology [View news story]
    V and MA adding a few more gators to their already powerful moats. :-)
    Feb 19 12:14 PM | 2 Likes Like |Link to Comment
  • GM follows Ford, steps up effort to use aluminum in high-volume pickups [View news story]
    Hard to tell what impact this will have, if any, on GM's share price as the impact won't be felt for a several years. Any thoughts?
    Feb 18 09:53 PM | Likes Like |Link to Comment
  • General Motors Investors Pay $0.76 For Every $1.00 Of Stock [View article]
    Thanks for the update. If you look at excess cash, PV of the DTA and unfunded pension liabilities, they basically cancel each other out so one can focus on projected normalized earnings and FCF to come to a current fair value, which should be in the mid/high $40s IMHO.
    Feb 18 09:33 PM | Likes Like |Link to Comment
  • Philip Morris: You'll Be Hard Pressed To Find A Cheaper Stock [View article]
    Good point, but I'm looking at the next 10+ years of FCF growth. Remember that 8-10% EPS goal is helped by share buybacks.

    My calculation is based on the overall business value, but since PM does not need additional capital to run it's business (FCF = NI and high ROIC), buybacks will add some value, especially when you're taking out shares with a nearly 5% dividend yield. That buyback value acts as a nice cushion in case the unit decline is sharper than my projections.

    There was a study by GMO that only roughly 25% of the value of a company is based on the first 5 years of earnings. In most DCF company calculations, the terminal value at year five is the large majority of total value and that TV is very sensitive to the perpetual FCF growth assumption. But as mentioned, the DCF does not incorporate accretive buybacks.
    Feb 18 02:20 PM | Likes Like |Link to Comment
  • General Motors Investors Pay $0.76 For Every $1.00 Of Stock [View article]
    I agree there is value in the DTA, but this is negated by the fact that the unfunded pension liability is over $25Bn.

    The calculated unfunded liability will be reduced once interest rates normalize as rates are a major determinant of projected pension returns.

    That being said, I think the DTA and unfunded pension liability essentially cancel each other out so looking at mid-cycle EPS (probably $5.00+) is the best metric to use when valuing GM, which indicates GM is very undervalued at the current $36. I expect the shares to reach at least the high $40's in a year when the EU breaks even and investors start to understand the nice multi-year tailwind that China represents.
    Feb 18 02:11 PM | Likes Like |Link to Comment
  • Philip Morris: You'll Be Hard Pressed To Find A Cheaper Stock [View article]
    Not sure if PM is super cheap if you look at company fundamentals using back-of-the-envelope calculations.

    I think with the long-term trend toward more regulation in foreign nations and increased awareness of health risks, the next few decades should see a 1-3% annual decline in unit growth. With price increases and efficiencies, I assume PM might be able to grow earnings and FCF roughly 3%.

    If you plug 3% into the perpetual growth model (1/(r-g)) and my required return is 9% (historical mkt return according to GMO), PM seems reasonably priced at 16.7x 2014 EPS which translates to $85/share so the stock ($81) is only trading at a 5% discount to fair value.
    Feb 18 12:06 PM | Likes Like |Link to Comment
  • General Motors: Accidental High Yielder Is A Buy After Recent Decline [View article]
    That may be true, but GM is quite undervalued. If you take a look at the world's top investors, they all seem to be buying GM, not F or TM.
    Feb 16 11:37 AM | Likes Like |Link to Comment
  • General Motors: Accidental High Yielder Is A Buy After Recent Decline [View article]
    The luxury segment matters a lot for profits and image, but reversing perception takes years. Cadillac was seen as "the standard of the world" in the 50s and 60s and management foolishly destroyed the brand when they utilized the strategy of building subpar cars but still charging premium prices (the crappy Cimmaron is the most vivid example). Now GM must rebuild that reputation and are on their way IMHO with the excellent ATS and CTS and I think producing a luxury coupe flagship like the Elmiraj concept car would help. Strong mid-line cars like the Chevy Impala and Camaro are also evidence that product development is a primary focus.

    GM recently won the J.D. Power Quality survey and the Mary Barra seems focused on building great cars given she was responsible for global product development before being tapped for CEO and certified "car guy" Mark Reuss took over from her in this role.

    A guy from J.D. Powers said despite GM being #1 in their survey, 90% of Americans would say Toyota is higher quality but predicted that would change in the next five years.
    Feb 15 07:56 PM | 1 Like Like |Link to Comment
  • Chipotle Was My Biggest Miss Of 2013. Will It Become My Biggest Miss Of 2014, Too? [View article]
    I like CMG after a preliminary analysis but agree the P/E is too rich so I bought SBUX instead at $70.90 (25x forward P/E). Best strategy is to keep CMG on your watchlist and buy if the market drops.
    Feb 15 07:13 PM | 1 Like Like |Link to Comment
  • General Motors: Accidental High Yielder Is A Buy After Recent Decline [View article]
    I agree Ray. We need to wait until the EU starts to break even in 2015 to get a real sense of mid-cycle profitability. GM is also moving to fewer platforms which helps margins and China looks to be a nice tailwind for the next decade. GM finally seems to make good cars (ATS, CTS, Vette, Malibu etc.) and was #1 in the latest J.D. Powers quality survey.

    I conservatively see the stock in the high $40s in a year (9-10x 2015 EPS) which is a very nice 35% return with dividends.
    Feb 15 03:33 PM | 1 Like Like |Link to Comment
  • Auto industry: All eyes on Chattanooga [View news story]
    Because they are driven by right wing ideology? :-)
    Feb 14 06:21 PM | 5 Likes Like |Link to Comment
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