Mavis Mauls A Mellon

Feb. 22, 2019 5:23 AM ET
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Baseline equity research, all cap value, Long Only, Value

Contributor Since 2007

I manage Wax Ink, an equity research firm comprised of individual investors not licensed or registered with any government agency. I have been an all cap value investor and independent equity researcher for the past 30 years.

Summary

  • New tires are fun.
  • I remember white walls.
  • Tires are not always round.

I could waste a lot of your time with graphs, charts, and other assorted worthless information all intended to show you that I know something about something when it comes to this company. But the truth is, I don’t know squat about this company. My intent is to provide you with a brief overview of the company’s various valuations so you can determine if you personally have any investment interest.

What They DoGoodyear is a manufacturer and distributor of tires and rubber-related chemicals for various applications. The company also is an operator of commercial truck service and tire retreading centers, and tire and auto service center outlets. Listed competitors include Compagnie Generale des Etablissements Michelin SCA, Bridgestone Corporation, and Cooper Tire and Rubber.

Short-Term TargetMy short-term target for the stock is $22.69, with an initial trailing stop set at $18.88. With a current price of $19.17, upward price movement will find resistance at $20.48 and again at $21.08, with final resistance showing at $22.03. Downward price movement will find support at $18.58.

Momentum TargetMy momentum target for the stock is $34. Momentum targets are determined by overlaying a company’s most recent annual EPS, its year-over-year earnings growth, and the current yield of a 10-year treasury. Momentum investing often requires investors to trade in stocks that have already enjoyed significant gains while making no allowances for overall market corrections or the sustainability of a company’s earnings.

Growth TargetMy growth target for the stock is $22. Growth targets are determined using a company’s year-over-year earnings growth, year-over-year PE growth, and year-over-year price growth.

Fair Value InvestingFair value investing, more commonly known as value investing, requires investors to consider a company’s overall financial condition including past and future earnings growth, free cash flow, both book and tangible book values, net current asset value, and many other valuation metrics. For many fair value investors, the minimum required hold is five (5) years. My fair value estimate for the stock is $51.

Prior Average ValuationsMy average valuation for the prior five year period of FY 2013 through FY 2017 was $41.83. Earnings during that time period averaged $3.49 per year.

Five Year Growth of $10KIf you had invested $10K in the stock five years ago (12/13), you would have received 419.29 shares of stock with a cost basis of $23.85 per share. Had you held the stock for five years and then sold it (12/18), you would have sold for $20.41 per share. You would have also collected $155.50 in dividends. Your initial $10K investment would have returned to you $8,713 or (3)% per year.

There you are, as promised, short and to the point.

WaxPosted on 02/22/19

Disclosure: I am/we are long GT.

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