Buy, Sell, or Hold: The Real Picture
Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
What's worse - the pain of change, or the pain of regret? I don't enjoy large amounts of change, but I hate regret. It's always a shame looking back at an investment wishing you would have bought or sold it a couple months earlier. The most frustrating part about regret is the time you lost that you can't get back. These are some companies that might require action to avoid regret.
With the recent $2.3 billion acquisition of Comex, a leader in Mexican paint and coatings, Sherwin-Williams (NYSE: SHW) looks to be in prime position for investors. With the paint maker's ties to construction and housing markets (which are starting to rebound), its stock sky rocketed nearly 72% last year. Price increases and higher paint sales (13%) helped increase margins in 2012. Sherwin-Williams seems fairly priced with a 4.2% FCF yield. This is one company that seems to be a good buy at this time.
Everyone loves a good meal with tasty bread, but what should investors do with Panera's (NASDAQ: PNRA) stock? With the help of solid same-store sales, revenues grew 17% in Q3. This isn't a huge surprise, considering revenues have increased for ten consecutive years. The increasing number of stores benefitted scale efficiencies. Scale efficiencies helped Panera's net income increase by 27% as margins expanded; leading to capital appreciation of 11% last year. Panera's stock appears to continue this trend and may help its shareholders become more profitable bread winners.
We all hear about Amazon (NASDAQ: AMZN) taking over the retail industry, but how has it affected HHGregg (NYSE: HGG)? In short, tremendously. If it weren't for a clean balance sheet and extremely cheap valuation, HHGregg would be labeled as a sell. However, with a FCF yield of over 27% (Amazon's is under 1%), the company deserves a little bit of time. HHGregg's clean balance sheet allows them to work through their current issues - at least for now. Though their stock has fallen over 31% in the past year, hope remains that it could rebound.
Amazon, however, is taking over the industry of retail. Don't let the extremely high price-to-earnings ratio scare you off. Amazon is investing in all the right areas - content, technology, and distribution. What kind of return do they get for their investments? How about a 23.7% increase in active customer accounts through 2012. Amazon's total active customer accounts now exceeds 180 million. The stock responded well last year, increasing over 45%.
There are two sides to every story. FedEx (NYSE: FDX) is no exception. The company's global express business is struggling; however, its ground and freight divisions are growing in North America. The stock price has not been overly impressive in recent years, but the company has plans moving forward. Yes, FedEx's FCF yield is small, at 2.2%, but the company has a three year cost-cutting plan that will lift earnings by $1.7 billion. In the past decade, revenues have nearly doubled, with only two down years.
The Foolish Bottom Line...
It appears as though we only have one company that isn't a buy. HHGregg is pushing my patience more every day, but I believe investors should give it a little more time before deciding to buy or sell. As for FedEx, Amazon, Sherwin-Williams, and Panera Bread, the pain of change doesn't appear to exist for those looking to buy. We have all seen companies that seem positioned to do well, and don't - but these companies should perform well. Don't look back and regret letting these companies slip by.
tlwofford has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, FedEx, hhgregg, Panera Bread, and Sherwin-Williams. The Motley Fool owns shares of Amazon.com and Panera Bread. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!