|New Threads Only:|
|New Threads & Replies:|
Forum List » Guru News and Commentaries|
Guru News, Stock picks and commentaries
Animal Appreciation Day
Posted by: Dr. Paul Price (IP Logged)
Date: April 23, 2013 09:17AM
Animal Magnetism & Investing: Perfect Together: Companies, like cars, are often named after animals. Three examples of "non-human" companies that may be good buys now are Deere (DE), Caterpillar (CAT) and Crane (CR).
Caterpillar is down significantly from its recent high on fears of a slowing economy. Crane and Deere have retreated from their peaks despite expectations for all-time record earnings per share (EPS) this year. In each case, the current P/E is at a large discount to the company's historical average P/E.
These three companies possess strong balance sheets and pay secure dividends. They have lengthy histories of steady payout increases. Each has proven to be a long-term wealth creator. In Price Growth Persistence, this trio outperformed 75% to 90% of the 1,700 stocks covered in Value Line’s main research universe over the past decade. (CR, DE and CAT outperformed 75%, 85% and 90% of Value Line's stock universe, respectively. See chart below.)
It is hard to believe you can buy great companies like these at bargain prices. CAT now trades close to its two-year low while yielding 2.58%. Deere, following a record-setting year, is presently available at the same price as it was almost one year ago.
Crane has backed off from its high of $56.99 in March, and now trades for not much above its April 2012 level. It closed at $52.34 today (April 22, 2013).
Takeaway: Excellent growth is rewarded over time to patient investors. In spite of the major indexes being close to their highs, there are still solid companies trading at attractive prices.
The last decade included some horrific economic and market-related periods. The crash of 2008, the debt-ceiling crisis, and the near bankruptcy of most European banks, are all included in the 10-year shareholder returns shown.
Over-trading in response to macro-economic events probably cost many holders of these companies much more than just sitting tight.
Buying on good news doesn't mean the stock won't go down. Selling pessimism often locks in losses.
Stock pundits are warning that these stocks are value traps and should be avoided until global growth picks up again. My guess is that by then, these stocks will be trading at higher prices.
You can only buy the best stocks at bargain prices when others are willing to part with their shares for lower prices. Every trade has a buyer and a seller. When you hear that everybody is getting out of industrials, ask yourself why you are not taking the other side of that trade.
CAT and DE are present holdings in Market Shadows' Virtual Value Portfolio and the Virtual Put Selling Portfolio.
Disclosure: Long CAT, Long DE
Stocks Discussed: DE, CAT, CR,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.