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ikkyu2 (99.46)

Dumbness

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August 10, 2011 – Comments (4) | RELATED TICKERS: OGZPY , AAPL , INTC

Gazprom, OGZPY.PK, is back to a P/E of 4.  Europe must be planning to return to the dark ages, using coal to heat houses and tallow candles for light.

INTC is back to a P/E of 9, 8 after the cash is backed out.  I guess the world doesn't use computers any more; I didn't get the memo.

AAPL at $363, with the cash backed out, is rolling on a P/E of 13, with year over year earnings growth of 80%.  Go look at those numbers again - I did just now, with a calculator, because they're frankly unbelievable.  If you can find me any other company who put in 80% y-o-y earnings growth with a P/E of 13 and no debt, I'll buy their shares too.  AAPL's just entered a whole new market, CHL's 600 million wireless subscribers; they're growing at an 80% year over year rate; and they are priced with a P/E of 13 when the average S+P historic valuation of large and mid cap stocks, all comers, is closer to 16.  Those stocks grow at about 8% on average, year over year.

Selling stocks is one thing; getting dumb is another.  If all you care about is price movement, well, look out below.  If, on the other hand, you'd like to buy some stocks at a discount, this is a pretty neat time in the history of the world to do just that. 

4 Comments – Post Your Own

#1) On August 10, 2011 at 5:17 PM, ikkyu2 (99.46) wrote:

BWLD is cheap too, P/E 21 and growing earnings 26% y-o-y, opening plenty of stores, new one or two every week.  That is CHEAP, people.

Hey look, there in the bathtub, circling the drain - did someone throw out a baby?!?

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#2) On August 10, 2011 at 6:20 PM, ElCid16 (96.42) wrote:

WMT, EMC, DLB, GLW, WM, GE, FCX, GES, SI, TEVA...they all look cheap, relative to the past 10-15 years.

They're not necessarily cheap relative to the past 100 years, though.  P/E ratios of 6-8 on blue chips and dividend yields at 5% on companies that normally yield 2-3% are cheap.  Will we get to that level?  Who knows...  But holding just a bit of dry powder for those potential valuations should be at the forefront of every investor's mind.  Remember ASH at 8, CAT at 35, and DOW at 10?  If a 2008esque environment again surfaces due to situations in Europe, I could see a lot of investors employing an "I've had it" sort of mentality after back-to-back stock market crashes in the past 3 years, and completely throwing in the towel.  That would seem to be the opportune time to buy.

Nibble at these prices, get the elephant gun out if things get worse... 

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#3) On August 11, 2011 at 1:38 AM, Seano67 (42.15) wrote:

"WMT, EMC, DLB, GLW, WM, GE, FCX, GES, SI, TEVA...they all look cheap, relative to the past 10-15 years.

They're not necessarily cheap relative to the past 100 years, though.  P/E ratios of 6-8 on blue chips and dividend yields at 5% on companies that normally yield 2-3% are cheap.  Will we get to that level?  Who knows...  But holding just a bit of dry powder for those potential valuations should be at the forefront of every investor's mind.  Remember ASH at 8, CAT at 35, and DOW at 10?  If a 2008esque environment again surfaces due to situations in Europe, I could see a lot of investors employing an "I've had it" sort of mentality after back-to-back stock market crashes in the past 3 years, and completely throwing in the towel.  That would seem to be the opportune time to buy.

Nibble at these prices, get the elephant gun out if things get worse... "

 

Bravo. Great point. Can't really stress enough the importance of always trying to keep some dry powder in reserve, cause things might get a whole heck of a lot worse before they get better again. I didn't get to participate fully in the 2008 bargain fest because all my cash was tied-up and I had no dry powder with which to invest, and I have been kicking myself for missing that (what I believed to be a once in a lifetime opportunity) ever since, so I have resolved to never be in that position again and to always have at least a bit of discretionary cash available if some extraordinary bargains should become available again- and in the meantime I carefully and slowly nibble as I see fit. 

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#4) On August 11, 2011 at 12:23 PM, VExplorer (31.00) wrote:

+1rec to ElCid16

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