Price The Market Part 9
Glen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Hi, my name is Glen Bradford and I am here on the Motley Fool trying to price the market. I undertook this mission fairly recently and thought it would be fun to start with the S&P500.
45. McDonalds (NYSE: MCD) is what is for dinner. I was talking with my friend who agreed with me that at $98 it is a little pricey. McDonalds is worth somewhere between $85 and $90. If you are a buyer, I think you should wait for a pullback. I don't think that it would make sense to pay $100 to own McDonalds at this point in time given the valuations of other opportunities but markets can choose to overpay if they so desire.
46. McGraw-Hill (NYSE: MHFI) owns one of the ratings agencies, S&P. Can't say I'm a fan of ratings agencies when bloggers are far more accurate and dependable. See ZeroHedge.com or BoomBustBlog to confirm this bias and look at how much money you would have lost if you used ratings agencies exclusively. It's laughable. McGraw is worth betwenen $40 or $50. It is presently trading on par with Moody's (NYSE: MCO) and that's no surprise. My perspective is that ratings agencies sell ratings and, frankly, marketing is everything. They are only taken seriously because they are ratings agencies. That said, they do a shoddy job of doing their job when it relates to systemic risk. There's a reason for this. If they did their job correctly, they wouldn't have a job because the banks paying for their ratings would stop paying for their ratings if it made the banks look bad.
47. Newell Rubbermaid Co. (NYSE: NWL) isn't factoring in a very strong 2012 into their forecast for what is to come. They fell roughly 50% earlier this year. Impressive. They countered it with a stock repurchase program. I think the stock got a little ahead of itself and then fell behind on selling as lower prices encourages lower prices. I have to compliment fear on this one. I think we are worth somewhere between $13 and $17 given their latest guidance. That said, I think that they might be underguiding and overdelivering on a forward basis so I'll set my target $14 to $18.
49. Nike (NYSE: NKE) - Just do it. Compared to McDonalds, this is a company that I'd consider paying $100 for. Target: $95-$110. I like how they recently raised their dividend. I expect name brands like Nike and Macy's to do better as the rich continue to diverge from the poor and marketing is everything when you're dealing with the wealthy and Nike has it. Apparently Jim Cramer agrees.
Glen Bradford and his investors do not have any positions in the companies mentioned.