Price The Market Part 11
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 recently decided to price the S&P500. This is my story.
56. Pulte Homes Inc (NYSE: PHM) has fallen to around $6 from over $5 in 2005. It appears that they bottomed around $4. Their real EPS for this last quarter after you back out all of the ridiculous stuff was $0.10. Their backlog decreased. They are building out suburbia. I don’t want to touch anything that has to do with the growth of suburbia. I think this is worth between $4 and $6. I wouldn’t pay more than book value for Pulte Homes.
57. RadioShack (NYSE: RSH) is sliding into new lows. Heck, they were profitable through the financial crisis. They're extremely cheap. I'll let you laugh at my $11-$15 price range that it is trading near the bottom of. I think that RadioShack might be presently in the back end of a series of higher lows before we start seeing some positive tractable momentum.
58. Ross Stores (NASDAQ: ROST) in the meanwhile is slamming out new highs. I will say that the price appears to be rising faster than the fundamentals. This likely reflects Ross Stores being undervalued a few years back. Markets are slow and appear to be catching up if they aren't caught up already. At this point if I was management I'd turn off the stock buyback program and simply report to investors that you are setting aside that cash instead in an escrow account to purchase shares if they fall to a more attractive valuation. Target: $80-$100. Keep it up, but the abundantly clear question is for how much longer will Ross outperform TJX?
59. Scripps Networks Interactive (NYSE: SNI) is a fairly straight forward company in terms of analyzing EPS and FCF. I like that. Feel free to see what I look at when I want to understand their latest quarter. This is probably worth buying if I was a fund manager around $40 and I'd say the valuation alone suggests a price of around $45-$50 is justifiable. I think that the exhuberance petered out earlier this year and investors simply aren't excited about stocks that aren't in an uptrend.
60. Sears Holdings Corporation (NASDAQ: SHLD) prints a chart over the last 5 months that confirms my bias that there is a ton of money to be made in the stock markets during times when stocks trade outside of a reasonable price range that accurately reflects their intrinsic value. Obviously Sears is worth between $50 and $80. For the most part they are running razor thin profit margins on declining revenues. I'm biased to thinking that we'll be hanging out near the bottom end of the range: Target $40-$60. I think that lower stock prices would benefit the company in the interim by letting them buy back shares at lower prices.
61. Sherwin-Williams (NYSE: SHW) is worth $80-$85. I wouldn't pay more than that and since it's trading at the top of that range I'd be a seller of rallies at this point. Their corporate presentations could easily be improved but I guess this doesn't matter as much as the financial results to investors who in my opinion appear to be willing to pay top dollar for Sherwin.
Glen does not have a position in any of the companies mentioned.