It's All About The Grovers: 5 Stocks Approaching $1000
Keith is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Thanks in part to the hit rap song “It’s All About The Benjamins” recorded several years ago by Sean “Diddy” Combs, many people in the U.S. know that the $100 bill features the picture of Benjamin Franklin. There are a lot of “Benjamin stocks” trading near the $100 mark. But what about the Grover stocks? These are the stocks with prices nearing the $1,000 per share level. The nickname comes from President Grover Cleveland, whose picture graced the thousand dollar bill which was last printed in 1945. Here are the potential Grover stocks that are gaining on the $1,000 level:
|Company||Closing Price - 4/20/12|
|Apple (NASDAQ: AAPL)||$572.98|
|Intuitive Surgical (NASDAQ: ISRG)||$576.57|
|Google (NASDAQ: GOOG)||$596.06|
|NVR (NYSE: NVR)||$773.58|
|Priceline (NASDAQ: PCLN)||$710.17|
To be fair, there are two stocks already in the Grover club - Seaboard with a price of nearly $1,900 and Berkshire Hathaway with a price of over $118K. Technically, Berkshire Hathaway should be a Woodrow rather than a Grover stock. For you trivia buffs, there actually was once a hundred thousand dollar bill with President Woodrow Wilson’s picture.
Which of the potential Grovers-to-be would be the best investment? Let’s look at some key comparisons in the table below.
|Symbol||Trailing 12-mo. PE||Forward PE||PEG||Return on Equity|
If you prefer making investment decisions primarily on low PE ratio, Apple is the winner with Google in a close second place with attractive trailing and forward PE values. Intuitive Surgical is a great deal more expensive than the others. We really shouldn‘t only evaluate on PE, though. Sometimes the best stocks to buy have higher PE ratios and the worst stocks have lower PE ratios.
Future growth is another important factor to consider. The PE to growth ratio (PEG) gives us some insight into how the stock’s current value stacks up against projected 5-year growth. Again, Apple and Google rank the best. Priceline is right in the middle of the pack. NVR and Intuitive Surgical have PEG values on the high end and seem a little too pricey for their projected growth.
Some investors prefer to use return on equity (ROE) as a barometer to determine what the future growth of a stock will be. Priceline and Apple top the list in ROE. Intuitive Surgical and Google both have solid ROE percentages also. NVR’s measure isn’t as impressive.
Then there is the question of which stocks have potential catalysts that could bump the share prices upward. Google, Intuitive Surgical and NVR all recently released positive earnings numbers. Google’s shares have drifted downward post-earnings release, though, while Intuitive Surgical and NVR have moved up. Earnings releases for Apple and Priceline could be catalysts for upward movement very soon.
Using all of the above evaluation criteria, Google and Priceline appear to be good buy candidates but Apple stands at the top of the Grover list. Apple's stock is still cheap from a PE and PEG perspective even after a strong +50% run over the past few months. It boasts a sky-high ROE. The real question is will its earnings release on April 24th meet expectations, exceed expectations or disappoint. If history is a guide, Apple will continue to exceed expectations.
However, Apple has been in somewhat of a correction over the past week. Could the sell-off be in anticipation of earnings that won’t live up to prior grand-slam results? Could be. Then again, maybe Apple will be like the original Grover. Grover Cleveland reached great heights by being elected as the nation’s 22nd president. He then lost ground by failing to win reelection. Grover came back, though, and won again to become the 24th U.S. president. If Apple wows with earnings this week, its shares could march upward for yet another double-digit streak. My apologies to Diddy, but it could be all about the Grovers.
Motley Fool newsletter services recommend Apple, Google, Intuitive Surgical, and Priceline.com. The Motley Fool owns shares of Apple, Google, and Intuitive Surgical. Keith Speights (www.keithspeights.com) owns shares of Apple. 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.