Price The Market Part 43
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. Join me on my journey of pricing the S&P500. Let's do this.
281. Iron Mountain Inc. (NYSE: IRM) is really expensive. I also question the company's buyback program. They should be using their cash flow to pay off debt. What they are doing is systemically risky and can only be done to slowly assist in their EPS until they experience an unforecasted slowdown. I think that there will be lower prices in the next 5 years due to this bad management policy coming back and hitting Iron Mountain in the face. Target: $25-$30. I think that management is too focused on their short term numbers at the expense of long run sustainability of the present corporate structure. I don't like the buyback one bit, especially at these prices. What on earth are they thinking? In my opinion they are actively disregarding long-term shareholders.
282. Xylem (NYSE: XYL) is a recent addition to the S&P500. In regards to their latest presentations, I can't say that I see anything from an engineering perspective that sets Xylem apart from other water utility companies. I do see water becoming an increasingly scarce resource, but I question whether China cares very much about their air and water quality. I don't see as much upside from present as the analysts appear to. The company's historical growth is very disconnected from their goals across the next 5 years and I think that analysts are using their goals to assign price targets. Target: $20-$25.
283. Honeywell (NYSE: HON) is a stalwart. If you want to own something for the next 5 years, their game plan here is very robust. The valuation at present is a little steeper than where I'd like to dip my toes in, but Honeywell is a company that much like in infomercials you can "Set it and forget it!" Target: $50-$58. Any higher and I'd be concerned that the chartests would come in and try to put in a top based soley on previous price action. I don't think the valuation is cheap enough to push Honeywell sustainably over $60 yet. In a few years, that will be another story. I think there is a case for higher prices then.
284. Illinois Tool Works (NYSE: ITW) is subject to the systemic risk for a global slowdown. Based on the last two years of price action I am going to assume that the market is not pricing in that type of systemic crisis. Target: $45-$50. There is danger here if China ever stops lying or if Europe ever cuts off their epic vendof financing ponzi scheme that has rendered various banks and governments over there arguably insolvent. I see risk here, but a small global slowdown is priced in and I think that is reasonable given my perspective as a Modern Monetary Theorist (MMT).
285. General Electric (NYSE: GE) is a company that I used to work for. Their meltdown back from 2007-2009 goes to illustrate what it is like when a large conglomerate / industrial company starts to dabble in systemically risky financial ventures. Their hands were in too many uncontrollable pots. At present, I do see upside here, but not a lot. Target: $16-$21. Conglomerates tend to trade at discounts and I think that the analysts are playing it conservative here. I'd have expected their targets to be a few bucks higher.
That's all for now. Thank you for your time and if you want me to price your company email me the company: globalspeculation at gmail.com
The Motley Fool has no positions in the stocks mentioned above. bradford86 has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
