By:
On:
In: Good company, Old Stock Analysis, Stock analysis
Tagged:
With: 1 Comment
Company name Exxon Mobil Corporation
Stock ticker XOM
Live stock price [stckqut]XOM[/stckqut]
P/E compared to competitors Good
MANAGEMENT EXECUTION
Employee productivity Good
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good
ANALYSIS
Confident Investor Rating Good
Target stock price (TWCA growth scenario) $73.14
Target stock price (averages with growth) $74.76
Target stock price (averages with no growth) $64.5
Target stock price (manual assumptions) $63.9

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

By:
On:
In: Around the web
Tagged: , , , , , , , ,
With: 0 Comments

In a recent Wall Street Journal article, Goldman Sachs compared the top 5 companies in 2000 to the top 5 companies today. In that comparison, Goldman concludes that the market is not repeating the problems of 2000 that caused the stock bubble in today’s market.

The top 5 companies in the S&P 500 today are:

  1. Facebook Inc.  [stckqut]FB[/stckqut],
  2. Apple Inc.  [stckqut]AAPL[/stckqut],
  3. Amazon.com Inc.  [stckqut]AMZN[/stckqut],
  4. Microsoft Corp.  [stckqut]MSFT[/stckqut],
  5. Alphabet Inc.  [stckqut]GOOGL[/stckqut].

and of 2000 were:

  1. Microsoft,
  2. Cisco Systems Inc.  [stckqut]CSCO[/stckqut],
  3. General Electric Co.  [stckqut]GE[/stckqut],
  4. Intel Corp.  [stckqut]INTC[/stckqut],
  5. Exxon Mobil Corp.  [stckqut]XOM[/stckqut].

The five companies in 2000 traded at 47 times expected earnings, according to Goldman. Today’s five biggest companies trade at 30 times expected earnings—making them by no means a bargain, but still less expensive than the stocks that dominated the stock run in the early 2000s.

The tech giants powering the S&P 500 today also reinvest far more of their profits into their businesses than their predecessors did. The five companies funnel about 48% of their cash flow from operations into capital expenditure and research and development spending, according to Goldman, well above the S&P 500’s 21% average and the 26% average for the five biggest companies in March 2000.

According to Goldman, “Lower growth expectations, lower valuations and a greater reinvestment ratio suggest the current concentration may be more sustainable than it proved to be in 2000.”

By:
On:
In: Good company, Stock analysis
Tagged:
With: 0 Comments

Company name WellCare Health Plans, Inc.
Stock ticker WCG
Live stock price [stckqut]WCG[/stckqut]
P/E compared to competitors Fair

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Fair
EPS growth Good
P/E growth Poor
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $390.62
Target stock price (averages with growth) $522.8
Target stock price (averages with no growth) $355.12
Target stock price (manual assumptions) $355.47

The following company description is from Reuters: https://www.reuters.com/finance/stocks/company-profile/wcg

WellCare Health Plans, Inc., incorporated on February 5, 2004, is a managed care company. The Company focuses on government-sponsored managed care services, primarily through Medicaid, Medicare Advantage (MA) and Medicare Prescription Drug Plans (PDPs), to families, children, seniors and individuals with medical needs. The Company operates in three segments: Medicaid Health Plans, Medicare Health Plans, and Medicare PDPs. As of December 31, 2016, it served approximately 3.9 million members in 50 states and the District of Columbia. As of December 31, 2016, it operated Medicaid health plans in Arizona, Florida, Georgia, Hawaii, Illinois, Kentucky, Missouri, New Jersey, New York and South Carolina. As of December 31, 2016, it offered MA coordinated care plans (CCPs) in certain counties in Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Mississippi, New Jersey, New York, South Carolina, Tennessee and Texas. As of December 31, 2016, it also offered standalone Medicare PDPs in 50 states and the District of Columbia.

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in WellCare Health Plans, Inc. as long as the indicators that I describe in my book The Confident Investor are favorable. I am adding WellCare to my Watch List.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor. You can review the best companies that I have found (and I probably invest my own money in most of these companies) in my Watch List.

How was this analysis of WellCare Health Plans, Inc. calculated?

For owners of my book, “The Confident Investor” I offer the following analysis (you must be logged in to this site as a book owner in order to see the following analysis). If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.
[s2If current_user_can(access_s2member_level1)]

In order to assist you in using the techniques of this book, the values that I used when calculating the Manual pricing above were:

  • Stock price at the time of the calculation: $252.73
  • Growth: 0.18
  • Current EPS (TTM): $7.82
  • P/E: 32
  • Future EPS Calc: $17.89
  • Future Stock Price Calc: $572.48
  • Target stock price: $355.47

[/s2If]
I hope that this makes you a Confident Investor.

By:
On:
In: Around the web
Tagged: , ,
With: 0 Comments

Google parent company Alphabet [stckqut]GOOGL[/stckqut] has taken away Apple’s title as the most valuable company in the world by reaching a market value of about $544 billion in after-hours trading today.

Alphabet closed Monday at around $518 billion, but its after-hours stock spike means that it’s bigger — for now. We’ll see if it maintains that at tomorrow’s open.

Apple [stckqut]AAPL[/stckqut] passed Exxon Mobil [stckqut]XOM[/stckqut] in 2011 to become the most valuable public company in the world, worth around $350 billion, before falling to about $538 billion at today’s close.

The changing of the guard here has less to do with an ascendant Alphabet and more to do with Apple’s iPhone sales, which are beginning to slow down. When Cupertino released its earnings report last week, it posted its slowest growth in phone sales since Apple introduced the iPhone in 2007.

Source: Google Surpasses Apple as the Most Valuable Company in the World | Re/code

By:
On:
In: Commentary
With: 0 Comments
ID-10041448
Thinking long-term requires knowing where you are going

Not all companies deserve your long term investment capital. Just because a company is a Good company, doesn’t mean that you should make a long term investment in the company.

Perhaps you have been reading this site and you found a company that was rated “Good” on the Confident Investor Rating (CIR) scale. You now need to decide if this company is attractively priced for you to confidently make a profit on your investment. Just because a company is well-run does not mean that you should buy the stock. In fact, most well-run companies have a market value that is quite reasonable and may even be a bit high.

A well-run company can be a lousy long term investment if a large number of investors invest in the company. This drives the stock price up and inhibits your ability to get a bargain. Often, investors will invest in well-run companies only because they know that they will not lose a large amount of money as a long term investment. They accept there is a chance they will only receive a small return if the market goes up. If the company loses value, these large investors will use the small loss as a tax offset for their earnings on other investments.

This approach will not work for you! You are a small investor. You know that there is a risk in investing and nothing is a sure thing. You need to be reasonably confident that your long term investment will increase. For this reason, you need to calculate if the company is valued fairly or if you can get a bargain.

You need determine what the stock price should be for a company. You want all of your investments to appreciate at least 10%. You need to locate the companies growing at 10% and then calculate whether the stock price is appropriate based on that level of growth. I put several estimates of the long term price in all of my stock analysis posts that are published on this site. If you read my book, The Confident Investor, you will learn how to calculate these estimates.  You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in e-book formats for Nook, Kindle, and iPad.

It doesn’t take a huge amount of time to calculate the worthiness of a company as a long term investment. You simply need to follow some simple rules that I carefully cover in my book, The Confident Investor. Once you have mastered these rules, you can be assured that every stock investment that you make will satisfy your needs as a long term investment.

Image courtesy of Pixomar at FreeDigitalPhotos.net