Price the Market Part 44
Glen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Hello friends, I've made it rather far on my journey started around a month ago with the goal of pricing the S&P500. Let's see what's up next.
286. General Dynamics (NYSE: GD) is a lot cheaper now than five years ago when it first traded through $70. They are mostly defense with some aerospace. I do think that there is reason to believe that on a global perspective, military activity might pick up in the next five years. Target: $65-$75. I think that General Dynamics will head marginally higher before there is cause for the company to trade lower. It looks to me that General Dynamics tends to set new lows after its price tends to run ahead of the fundamentals. I don't think we are there yet.
287. Grainger (W.W.) Inc. (NYSE: GWW) has literally gone parabolic. Danger! Sell this one on the chart alone. A P/E over 20, outrunning analyst estimates, and a long-term forecasted growth rate in the low double digits is unsustainable in this market. This chart is set for a huge pullback. Target: $140-$160. Underperform. Normally I'd like to see things top out before I put on an underperform but this is definitely more expensive than comparable stocks with a similar growth profile and the chart is parabolic. I may be off $20 from the high but eventually even the longest of the long-term holders will find a price that they are willing to ring the register. You can bet on it. $200 is a milestone that will probably put in the top. Be careful though because usually thresholds like this get broken and run past for a few easy momentum trader bucks.
288. Goodrich Corp. (NYSE: GR) is looking to get acquired. I don't like trading these stocks but congratulations to anyone who owned this in September or August. I'd sell now if I was you. From here out the probabilities only work against you if the deal falls through. Target: $80-$125. Do I expect the deal to fall through? Nope, but why risk it for such limited upside?
289. Eaton Corp. (NYSE: ETN) is not a bad investment at these prices. Target: $45-$54. As a potential buyer, I'd personally wait for a pullback if one comes. If it doesn't, oh well. I think that analysts are conservative with their price targets here and that Eaton could blow through them, which would result in the analysts simply raising their price targets. I think Eaton's historical price volatility, especially through the crash, was overplayed. I see their business line of electric control products, fluid power systems and fuel efficient transmissions as being relatively inelastic on the demand side. Those are things that we need all the time. You could effectively think of Eaton as the consumer staples of the industrial sector.
290. Dun & Bradstreet (NYSE: DNB) has created more than $1B in wealth since the company first traded at this price half a decade ago. For a company trading at a valuation of $3.8B, that's a large portion. What was relatively expensive then is relatively inexpensive now by comparison. The analyst target prices have dropped from $100 to the low $80s. In the meanwhile they've been leveraging up their balance sheet as well, which looks to be a little dangerous in my opinion. Target: $70-$80.
That's all for now. Thanks for your time and consideration and if you want me to price your company include it in an email to globalspeculation at gmail.com
The Motley Fool owns shares of General Dynamics. 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.