Price The Market Part 36
Glen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Welcome to my personal journey to price the S&P 500. And we're off.
246. Abbott Laboratories (NYSE: ABT) is trading at full valuation according to analysts. Sell. That's my first gut reaction. The company is trading at 12x its forecasted next-year earnings. Shares have been pushing $60 over the years, including 2001, 2007, 2008, and now. Abbott's 10-year financials and five-year financials point to solid, reliable growth. Contrary to popular belief, this looks cheap to me given that profile. I'm going against the grain. Target: $60-$65. I think that Abbott could carry a multiple of 15 and still be considered relatively cheap using Ben Graham's valuation formula: P/E = 8.5+2G. I prefer Abbott to a lot of other companies that appear to be stalwarts.
247. Allergan (NYSE: AGN) looks pricey to me. Target: $75-$85. I think that this stock carries too much excitement. For a forecasted five-year growth rate of 13%, paying 30x earnings is a little bit on the crazy side, from my perspective. I think that Botox is the hot drug at present, but that it will become far less sexy over time. I'm looking forward to various alternatives that are definitely not priced in at present. I'm a fan of stem cells, calorie restriction, and other various alternatives. Something about injecting my body with toxins seems counterintuitive.
248. AmerisourceBergin (NYSE: ABC) looks a little under where I would mark its intrinsic value. Target: $36-$47. The company has very thin profit margins, but it was profitable throughout the last financial crisis. Because this is trading at such a slight discount to fair value, I think that there are other, better, undervalued opportunities out there. I suppose that this is the first company that I disagree with Bret Jensen on. Sure, this is slightly undervalued, but I don't find it as compelling as he does. Maybe I'm wrong, maybe he's wrong, maybe we are both wrong. Time will tell.
249. Amgen (NASDAQ: AMGN) has been able to grow earnings faster than revenues. Target: $58-$64. I'd be a seller at present. If you want to buy, now is not a good time to do so. Wait for better prices. I feel like they are just on the horizon as the stock is pressing up into analyst targets and they aren't raising them. How long can you hold your hands against the ceiling before they tire out? I feel like the race is on to solve that problem for Amgen's stock price.
Extra: Gorilla Glass 2 sounds pretty awesome. I actually picked this one up from CNBC's Fast Money. Corning (NYSE: GLW) is cheap. Target: $15-$18. What you see at present is bottoming. Corning's glass is going to be in a lot of products, even though the company is unwilling to admit that its older products are likely going to sell in lower volumes. I think that there is a huge market for this type of glass, especially as you imagine what it would be like in larger applications that go beyond your smart phone or tablet. Think big, this stuff is glassy. The present price is a great entry point.
Glen has no positions in any of the companies mentioned above.