How does a 17.6% annual return for the next three years sound?
Yesterday I briefly mentioned that I came across a fantastic write-up on Becton Dickinson (BDX) that the folks at East Coast Asset Management put together. Here's a link to the twelve-page report. It's definitely worth a read.
The Bullish Case on Becton Dickinson (BDX) From East Coast Asset Management
Here's a few highlights of their case for purchasing the company's stock:
- BDX will benefit from the aging baby boomer population.
- It currently trades at only 8 times EV/EBIDTA, which is significantly below its five-year average multiple of 10.1 times EV/EBIDTA.
- I love this one...BDX's dividend isn't huge (1.9%), but it has raised it for 37 consecutive years.
- The Company has posted impressive results over the past five years, including 23.5% ROIC and 22.2% ROE.
- The Company consistently repurchases its shares, with $450 worth of repurchases slated for this year.
- East Coast believes that BDX's intrinsic value is $90 to $95/share, a 35% to 40% increase from here.
I am currently long BDX in CAPS, having initiated a position in it at $77.57 in mid-April. The stock is down 13% since then, which sounds pretty bad and it is but the S&P 500 is down over 10% over that same time period. Having said that I take absolutely no solace in moral victories like outperforming a major index, but still losing money in real life. I expect BDX to handily outperform the S&P 500 over the next several years.