Admittedly, we aren't very interested in diversification or portfolio rebalancing, relying instead not only on our ability to buy great companies at reasonable prices, but on our ability to hang on to them for very long periods of time.
Simply put, we took all of the rules about investing, and replaced them with rules that we felt made better sense, ending up with a portfolio that consists of individual equities, cash, and nothing else. Gone are any type of bond, mutual fund, ETF, option, limited partnership, or insect.
When it comes to putting our capital at risk we simply found that anything other than cash, and equities held for extended periods, was only making our discount broker money. So we wised up and decided instead of hedging our risk, why not get well paid for taking the risk in the first place.
The first thing we decided as we reinvented our investing universe, was that investment returns should be based on a lifetime of investing, not just a few years. We also decided that since we could not control the weighting of companies that made up an index, anything which compared investment returns to an index was simply an attempt at showmanship. So, you guessed it, we don't use the SP 500 for anything.
Many of today's popular investment websites offer newsletter subscription services. For $150 or so, a subscriber ends up with an annual subscription to a newsletter that generates a couple of investment ideas a month. Some of our clients use these newsletter services to generate investment ideas, so we have had occasion to see some of them. And while most of them are very well done, we have to wonder about the investment value of some of the selections.
What made us wonder about some of these newsletter investment selections was we noticed in several instances, the investment selections for a particular month were repicks, meaning the company producing the newsletter just regurgitated something from prior months and repackaged the information.
Another of the things we found interesting not just about newsletters but investment services generally, was that none of them provided an estimate of the value of the investment. Nor did they provide a buy target, a sell target, or even a breakdown of a company's financial metrics. Instead they seemed to provide lots of charts and graphs, which made us wonder whatever happened to the power of independent thought?
We have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours, nor do we receive any compensation to write about a specific stock, sector or theme.
Our valuation work is based on audited or annual financial information as taken from a company's most recent SEC Form 10-K filing. Unaudited, or quarterly financial information as taken from a company's SEC Form 10-Q filing, is not used unless otherwise noted.
Sysco Corporation, Inc. - (SYY) The company markets and distributes a range of food and related products primarily to the food service industry in the United States. The stock closed recently at $29.85, with Resistance at $31.99, First Support at $29.60 and Second Support at $29.525. Should the stock price fall below second resistance, the next stopping point would be at the 52 week low of $26.99.
Our Reasonable Value Estimate for the stock at this time is $35.00, with a Buy Target of $21.00, a First Sell Target of $41.00, and a Close Target of $43.50, based on a minimum 5 year hold. The stock currently has a trailing PE of 15.3 and forward PE of 14.
Earnings are scheduled to be announced the bell on Monday, with analysts expecting earning of $0.47, $0.02 better than one year ago.
Flowers Foods, Inc. - (FLO) The company is a producer and marketer of bakery products in the United States. The stock closed recently at $25.65, with First Resistance at $26.17, Second Resistance at $27.58, First Support at $25.43 and Second Support at $22.97.
Our Reasonable Value Estimate for the stock at this time is $33.00, with a Buy Target of $19.50, a First Sell Target of $38.50, and a Close Target of $40.50, based on a minimum 5 year hold. The stock currently has a trailing PE of 17.3 and forward PE of 15.4.
The company will announce earnings this week with consensus estimates of $0.39 versus $0.33 from one year ago.
Sara Lee Corporation - (SLE) The company manufacture and marketing of a range of branded packaged meat, bakery, and beverage products worldwide. The stock closed recently at $17.02, with First Resistance at $17.06, Second Resistance at $20.26, First Support at $15.14, Second Support at $12.09.
Our Reasonable Value Estimate for the stock at this time is $21.00, with a Buy Target of $12.50, a First Sell Target of $24.75, and a Close Target of $26.00, based on a minimum 5 year hold. The stock currently has a trailing PE of 22.7 and forward PE of 15.8.
The company is scheduled to announce earnings next week of $0.25, $0.11 worse than one year ago.
Whole Foods Market, Inc. - (WFMI) The company owns and operates natural and organic food supermarkets. The stock closed recently at $53.00, with Resistance at $53.46, First Support at $50.20, and Second Support at $41.54. Should the stock price slip below second support, expect it to fall to its 52 week low of $26.88.
Our Reasonable Value Estimate for the stock at this time is $36.50, with a Buy Target of $22.00, a First Sell Target of $42.75, and a Close Target of $45.00, based on a minimum 5 year hold. The stock currently has a trailing PE of 37 and forward PE of 27.5.
The company should announce earnings this week of $0.45, $0.13 better than the same period last year.