Pick Your Price Target! 55
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 am having a great time pricing the S&P500 one company at a time. Let's take a look at what your company is worth.
336. United Parcel Service (NYSE: UPS) has been powering higher for 4 months straight and is pushing 52-week highs. Analysts have been issuing targets from $80 on up. The truth of the matter as it relates to UPS is that they'll do fine for as long as the US Government continues to run a sizable budget deficit. Under present conditions, expect huge drops in the deficit and UPS will get beaten down in the coming 12 months. If, on the other hand, the US Government continues to give the economy gas by negotiating a larger deficit, UPS is fairly priced. At 15x $5 EP,S $75 is the most that I'd be willing to pay for a transportation company, ever. Target: $65-$75. Now is either the time to ring the register if you think that we'll see less austerity out of the USA or Europe or it is the time to bet higher prices on everything, which will raise gas prices as well and cut into their margins. It's a lose/lose as I see it unless UPS pushes liquified natural gas, which is dirt cheap thanks to horzontal fracking.
337. Textron Inc. (NYSE: TXT) makes cool rich people stuff: Golf Carts, Cessnas, and Helicopters. And, they'll help you finance your purchase. Historically, the company tends to trade around 10x EBITDA even through 2007-2009. Earnings for 2012 are guided to be around $1.90 so analysts raised their estimates to $28. I think that's a little giddy. Target: $20-$25. I think that you can count on the US Government to negatively impact these kind of companies as lawmakers unnecessarily impose budget constraints.
338. Waste Management Inc. (NYSE: WM) is consistently profitable and is trading at a slow growth valuation while kicking off a 4% dividend. Target: $30-$35. There is a lot of money in trash. I think that this is more like a bond than a stock. If around 4% sounds good to you, along with adjustments that will offset inflation, this is probably a better bet than US Treasuries. This is a safe stalwart but the price that you have to pay is too steep for me given my perception of future global price volatility and the opportunities that we'll see.
339. Jabil Circuit (NYSE: JBL) is also pushing out new 52-week highs. Jabil looks a lot cheaper. They are forecasting very little top line growth for 2012. Jabil advised during their conference call that they expect that they'll outperform the macro in the long term. Why then, don't they have a price above the average S&P500 company? Got me. Target: $23-$29. I think that the stock is pricing in too much of a slowdown in earnings growth. Remember, when you are pricing companies you have to use long term growth rates. Short term swings allow for opportunistic investors to buy into cheap valuations.
340. JDS Uniphase Corp. (NASDAQ: JDSU) has the short sellers in full retreat! Run for the hills my boys! They cracked the wip at 4pm last night and sent the stock up 5%+ after a day of 3%+. What's it worth? They beat earnings estimates by 50%. Price targets were raised, silly analysts. These are the guys that were dropping them in August. Are we predicting the current price plus 20% instead of using financial models Stifel Nicolaus? Looks like it. This company was doing really well before those darn floods. I am a fan of long term earnings and short termers appear to have gotten a little carried away. I vote they bounce back. Target: $14-$19. Outperform.
That's all for now. If you want me to take a look at your companies, send them my way: globalspeculation at gmail.com.
Motley Fool newsletter services recommend Waste Management. The Motley Fool owns shares of Textron, United Parcel Service and Waste Management. 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.