Price The Market Part 49
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 welcome to my journey as I price the S&P500.
310. Cummins Inc. (NYSE: CMI) has taken the financial crisis by storm and has absolutely been killing it. Their high in 2008 was blown out in early 2011 and the question is, will they set new highs this year? Yes, I think so. Cummins is trading at 11x earnings and is a stalwart. Normally these trade around 13-15x earnings. Target: $95-$115. The thing about Cummins is that next year this time it should be worth $105 to $125.
311. Precision Castparts is one that I've priced earlier.
312. Priceline.com Inc (NASDAQ: PCLN) is winning more online business than ever, but they come at a steep price. They've been channeling between $450 and $540 for months. Their expectations on a forward basis are high, something like 20% growth for the next 5 years. Their historical revenue growth is in the neighborhood of 30% when you factor in this last, fantastic year. I think that this defies the normal topping pattern, the growth in the fundamentals appears to be there and to be believable. Target: $490-$530. As long as the company continues to perform, I'd expect the company to appreciate at a rate of 20% a year or maybe more. Historically the company has been able to increase their net margins. If they miss, the fall is at least $100.
313. Pitney-Bowes (NYSE: PBI) is consistently profitable and is trading fairly inexpensively at first glance. They kick off a solid dividend and at this price a share buyback makes sense. Would I own it? Not at these prices as I would prefer a discount to fair valuation. Target: $17-$21. I just don't see the growth here and the company is maintaining slightly negative guidance on revenues. I almost wish that they paid out a smaller dividend and set aside cash to do buybacks when their price dips. Their present dividend is a little strong for my liking. I prefer Pitney-Bowes to US Treasuries though as a place to park your cash.
314. Parker-Hannifin (NYSE: PH) kicks off a sustainable dividend. Target: $75-$90. I think that the present valuation at $85 is where I'd start exiting on any rallies. There is cause to believe that there may be an industrial slowdown as Greece is up for default again combined with this being a gloomy earnings season on Wall Street. I guess you could say that the drop to $60 wasn't terribly uncalled for. Sure, things became brutally cheap and using my target you would have bought, but I'm recommending you try to stay low-risk until we get more clarity out of Europe.
Extra: I was asked to take a look at Zagg Inc (NASDAQ: ZAGG). I looked into this company a while back and most of what they did was IPhone covers. Now it appears that they do all sorts of personalization and gadgets for tablets and phones. I'd be curious to see what the outcome of a conversation between Zagg and Corning, the maker of Gorilla Glass 2.0 would be. My bet is on Corning. Zagg has a lot of red flags. Target: $2-$5. Underperform.
That's all for now. Send me your picks: globalspeculation at gmail.com
Motley Fool newsletter services recommend Cummins and priceline.com Incorporated. 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.
