Comments on: Earnings & Reactions: CostCo versus Alcoa

By: ph

ph — Thu, 31 May 2007 13:50:08 +0000

What does everyone think about GE selling their Plastics division to Sabic for $11.6 billion? GE is making about $1.5 billion in the process, and makes me wonder if the sum of the parts is more lucrative than the whole.

By: kennycan

kennycan — Fri, 13 Oct 2006 23:30:55 +0000

bondguy – perhaps the reset on their mortgage ate up all their energy savings.

By: Wayne S.

Wayne S. — Fri, 13 Oct 2006 22:12:18 +0000

I checked Russell 2000 PE’s and the median PE per telecharts is 18.20 – I cannot vouch for data, can’t quantify median vs average, but still barely half the 35X Barry mentions. And 35X just SOUNDS too high.

But 18.20x is pretty high anyway and this late in the cycle with inverted yield curve…..I’m out and watching (cursing) on the sidelines.

By: bondguy

bondguy — Fri, 13 Oct 2006 18:10:41 +0000

Question for the people who argue that the retail sales number was strong: Ok I understand that with falling fuel prices retail sales fell and that consumption spending increased but how come the overall level of retails sales is down from August. In otherwords if the consumer spent less on gas last month they did not spend all of those “savings” on consumer goods. So overall spending was down, does it matter massively what the composition of the spending was? It looks as if the consumer “saved” part of their energy windfall. Anyway less money was forked over to retailers in September than in August. Any thoughts are welcome. I enjoy all the thoughtful post on this site.

By: S

Fri, 13 Oct 2006 15:41:10 +0000

DPZ bought back $145,000,000 worth of its stock during the first three quarters of the year. Until they file the 10Q, we won’t know the average purchase price, but an educated guess suggests they bought back about 6%-8% of their stock oustanding.

If companies can organically grow operating earnings 6%, then buy back 6% of their stock, they’ve manufactured EPS growth of 12%.

Financial alchemy when the economy grows 2%.

By: Chris

Chris — Fri, 13 Oct 2006 15:32:14 +0000

There is an interesting conversation going on at Minyanville.com right now where Bernie Schaeffer is saying that he thinks the S&P rallies 15% between now and the end of the year. Sounds like a pipe dream to me but the argument is persuasive, any thoughs BR?

http://www.minyanville.com/articles/index.php?a=11413

By: GRL

GRL — Fri, 13 Oct 2006 15:00:59 +0000

For “bubblre of the week,” I nominate dividend paying stocks.

In reits, check out WRE, which, with a forward annual dividend of $1.65, at a recent $41.65, yields a whopping 3.96%. Per Yahoo, trailing 5 year average yield is 5.1%, which sounds about right.

Then there is MO, which, with a forward annual dividend of $3.44, at a recent $70.20, yields all of 4.34%. Per Yahoo, trailing 5 year average yield is 4.8%. Keep in mind, this is post Schwab, so the price has been knocked down some from a recent high of ~ $85.00. If not for Schwab litigation risk, the yeild would be more like 4.04%.

For a case of massive overvaluation, there is ASN, an apartment reit. Traditionally this one yielded around 6.2%, but at a recent $58.36, with a forward dividend of $1.74, that comes to a massively puny 2.98%, which doesn’t even keep up with “inflation ex-inflation.”

Then there are business development corporations like ACAS and ALD, all yielding in the 8% range. These are in line with 5 year averages, but, keep in mind these are not tax-advantaged, and a few months ago they were yielding around 9-10%.

I could go on, but you get the picture. I don’t understand why this is happening. It is great to get capital gains, but it is going to kill my long-term returns.

I pray every day for these stock prices to go DOWN, but it does no good.

By: Barry Ritholtz

Barry Ritholtz — Fri, 13 Oct 2006 14:47:54 +0000

Joe,

That is very consistent with my belief you can do better buying Asia than US stocks. Look at tETFs for Jappan, S.Korea and Australia, all feeders for China

By: joe

joe — Fri, 13 Oct 2006 14:45:23 +0000

You guys are too funny, whether GE earned .48 or .49 has zero bearing on anything. If you want to take anything away from the report, listen to the call. To me, the points of interest were the strength across the board in infrastructure and the weakness in plastics. Infrastructure, particularly overseas, is going to be a driver for years to come. Plastics is getting killed by commodity prices and the fact that it’s becoming more commoditized.

Also, GE’s balance sheet is worth digging into. If you separate the operating businesses from the finance business, the operating businesses appear on track to earn about $19-$20B in operating income and carry about 11B in debt. Obviously the finance operation is leveraged, but it appears that GE has all the financial flexibility in the world which will greatly help them in the US recession to come.

By: wcw

wcw — Fri, 13 Oct 2006 14:37:05 +0000

All I can say, when vols are this low and you see the market moving up on bad news, you want a few cheap, short-dated index calls. They’re tax-advantaged (60% of any gain is “long-term” even when, like the Octobers, they expire in less than a week) and they’re a cheap hedge against missing out on continued index moves.

If not for my October calls, my account would be looking pretty sorry right now.