***Official*** 2011 Stock Market Thread

[IHateMyJob2004]

$200 would imply a forward PE of 8, and 6x EBITDA/EV.

AAPL is currently trading at about 20x FCFttm. That is not sustainable without ridiculous growth for the next 10 years.

AAPL is a speculative stock. That is all there is to it. Just don't be upset if you buy and get run over by a truck. If anyone really thinks that Apple's monopoly (of sorts) in a quickly evolving sector is sustainable, more power to you.

 

[JS80]

AAPL is currently trading at about 20x FCFttm. That is not sustainable without ridiculous growth for the next 10 years.

AAPL is a speculative stock. That is all there is to it. Just don't be upset if you buy and get run over by a truck. If anyone really thinks that Apple's monopoly (of sorts) in a quickly evolving sector is sustainable, more power to you.

How are you calculating that? I'm getting 15.8x FCFttm, which is 13.6x FCFforwardtm. Apple can achieve that growth easily. Crazy enough, there are so many markets they haven't even tapped. With CDMA iPhone 4, iPhone 5, 4G iPhone, iPad 2, 4G iPad, there is plenty of opportunity to meet 13.6x forward FCF. Add in new products and they are a 15-20x company.

You want to see unsustainable growth? See CRM, OPEN, VMW.

 

[JS80]

$200s as in below $300 (like $290). Short term play only. I haven't made that plunge yet.

There just really isn't a good reason for it to triple in about a year. This thing has overshot its "equilibrium" point. But, with all irrational stock market moves, sometimes buying high (and hoping for higher) is better than selling high.

What's so irrational about 15x valuation?

 

[thepd7]

AAPL is currently trading at about 20x FCFttm. That is not sustainable without ridiculous growth for the next 10 years.

AAPL is a speculative stock. That is all there is to it. Just don't be upset if you buy and get run over by a truck. If anyone really thinks that Apple's monopoly (of sorts) in a quickly evolving sector is sustainable, more power to you.

quoting for posterity. I can't imagine how you would look at ~5 years of pure smart phone domination and think that it's going away anytime soon. They aren't going anywhere in the next 5 years.

 

[Imp]

Major bank earnings reports this week. May double my holdings in C within the first hour tomorrow morning.

 

[dullard]

What's so irrational about 15x valuation?

Because honestly, none of that is sustainable long term. Not even close. They are expecting a 5% drop in stock price today, and I doubt it will stop until the $290s are reached.

 

[Phokus]

IHateMyJob2004,

Thanks for creating the 2011 thread - I was going to open it up this morning, but saw you had already did. I'm okay with breaking a 5-year ongoing tradition

You may have noticed that I haven't been as active lately. It's not because of my loss of interest, but life and other things have gotten mired in. I'm still checking in pretty frequently, but it's hard when I'm traveling all the time. 100,000 miles last year!

Here's for an interesting new year!

Azurik

How the hell are you travelling so much with a full time gig?

 

[Phokus]

Hey i half payed attention to the 2009 thread and i noticed that a lot of you guys were talking about the RMBS lawsuits and thinking they'd win, how'd that turn out for you? What was the result of the lawsuits? I don't know when most of you bought RMBS:

http://www.google.com/finance?q=RMBS

 

[thepd7]

Hey i half payed attention to the 2009 thread and i noticed that a lot of you guys were talking about the RMBS lawsuits and thinking they'd win, how'd that turn out for you? What was the result of the lawsuits? I don't know when most of you bought RMBS:

http://www.google.com/finance?q=RMBS

they're still ongoing, I bought and sold, made $800 or so. I owe Azurik a beer next time he's in Boston.

 

[IHateMyJob2004]

How are you calculating that? I'm getting 15.8x FCFttm, which is 13.6x FCFforwardtm. Apple can achieve that growth easily. Crazy enough, there are so many markets they haven't even tapped. With CDMA iPhone 4, iPhone 5, 4G iPhone, iPad 2, 4G iPad, there is plenty of opportunity to meet 13.6x forward FCF. Add in new products and they are a 15-20x company.

You want to see unsustainable growth? See CRM, OPEN, VMW.

I jsut use ballpark numbers for tmm, etc. 13x and 15x are the same in my head. With both, you should only be paying 7x or so. Even if it is worth 15x-20x FCF, that still means that one should be buying at 7-10x.

What you are forgetting is Droid, Microsoft based products and everything else competitors can do. Everything you say is exciting but everything you say simply reinforces how quickly things evolve. And just as quickly, people are willing to move to new products and change loyalties. Bottom line is that people will only pay a certain percentage of their income for cell phones and similar devices. And this is all tied to GDP which will essentially cause it to hit a growth wall that it can not overcome. The real question. How many people that want smart devices don't have them? that is the only growth opportunity out there.

 

[IHateMyJob2004]

quoting for posterity. I can't imagine how you would look at ~5 years of pure smart phone domination and think that it's going away anytime soon. They aren't going anywhere in the next 5 years.

I'll make more in LEE (up about 5% right now) over the next 5 years than anyone else will make in 5 years with AAPL (barring irrational pricing of AAPL). Quote that for posterity.

 

[Dacalo]

Because honestly, none of that is sustainable long term. Not even close. They are expecting a 5% drop in stock price today, and I doubt it will stop until the $290s are reached.

Didn't even come close to $290 today.

 

[IHateMyJob2004]

So, I am now sitting on 15-20% cash and have no where to stick it. ANyone know of some undervalued companies I can research?

 

[rcpratt]

***

 

[thepd7]

I'll make more in LEE (up about 5% right now) over the next 5 years than anyone else will make in 5 years with AAPL (barring irrational pricing of AAPL). Quote that for posterity.

that may be so but media is a huge risk compared to Apple.

 

[sandorski]

Buy Low, Sell High.

Overall this should be a good year, for the Economy anyway.

 

[IHateMyJob2004]

that may be so but media is a huge risk compared to Apple.

How much have you researched print media? It's funny. Everyone shares the same opinion but no one does the research. What are the risks to print medias business model? Are those risks being addressed?

The only risk is risk of loss of capital. And with Apple, valuation supports that it is very high risk. With LEE, there is almost no risk other than the fact that they need to keep up with changing technolgies. The beuaty of print media used to be stagnant technological changes along iwth the fact that they are commonly monopolies or duopolies in the regions they serve. The thing is, they are still monopolies or duopolies. The content devilery mechanism is simply evolving faster than it used to. At the same time though, capital expenditures should actual be reduced over time due to digitial media. Also, there is less paper and ink to buy. And printing for conglomoerites can become more centralized as the demand for print media reduces.

 

[lothar]

So, I am now sitting on 15-20% cash and have no where to stick it. ANyone know of some undervalued companies I can research?

You should have either bought stock in GRVY weeks ago or add to your LEE holdings.
GRVY is a stock that's worth $3-4...Buying at $1.53-$1.60 was a no brainer for me...Buying at $2 now? Not so much.

 

[IHateMyJob2004]

You should have either bought stock in GRVY weeks ago or add to your LEE holdings.
GRVY is a stock that's worth $3-4...Buying at $1.53-$1.60 was a no brainer for me...Buying at $2 now? Not so much.

GRVY .... I'll look into it.

People's Education keeps popping up on my radar screen. I've researched it two different times over the past month and each time I conclude that there are to many unknowns.

As for LEE, I'd initiate a holding here but I am pretty much at break even. I am still kicking myslef for not buying 60% ago.

Tongiht I hope to read up on AbitibiBowater. It's a recent bankruptcy that Prem Watsa is buying into a little bit. Upon a glance, bankruptcy has dropped it's debt load to next to nothing relative to FCF. I have alot of readign to do but that is what makes investing fun.
http://en.wikipedia.org/wiki/AbitibiBowater

PS: How is your SD holding? I sold mine off yesterday. Not a huge gain, maybe 10%. Another example of missed dollar cost averaging.

PSS: $500 value investing contest http://www.gurufocus.com/news.php?id=119858

PSSS: This is an edit .... Sold SD at $7.98. Now at $7.51. If it gets below $7, I'll buy it all back and if it drops 30% or so I'll double up. I should add that I sold off the other half of my WFC holding. So, I sold two lots at over $30. A nice 120% gain over a year. I'll buy back if it ever gets to $25 again. The nice thing though, i have cash right now and a dip would be welcomed!

 

[dullard]

Didn't even come close to $290 today.

Not that short term - think this time next quarter. It did temporarilly drop by more than 5% though. But, like I said, I was too late to short it and gain on that 5%.

$290 is only returning to Oct 2010 levels with a little profit taking.

 

[hofan41]

Hey i half payed attention to the 2009 thread and i noticed that a lot of you guys were talking about the RMBS lawsuits and thinking they'd win, how'd that turn out for you? What was the result of the lawsuits? I don't know when most of you bought RMBS:

http://www.google.com/finance?q=RMBS

bought at $16 and sold at $24. made about $10k, enough to offset the massive GNVC loss. =P

 

[Imp]

Well, OMFG, the correction is finally here.

Banks are all crashing, sold my C at a $50 profit (1&#37 yesterday versus $350 on Friday. Also, sold RIM today at a nice 3% gain in about one month. Glad I did, it went down a lot more.

Oh well, freed up half my portfolio to buy in at rock bottom.

 

[hiromizu]

Well, OMFG, the correction is finally here.

Banks are all crashing, sold my C at a $50 profit (1%) yesterday versus $350 on Friday. Also, sold RIM today at a nice 3% gain in about one month. Glad I did, it went down a lot more.

Oh well, freed up half my portfolio to buy in at rock bottom.

Why did you sell? You should buy when it dips, not sell.

 

[JS80]

How much have you researched print media? It's funny. Everyone shares the same opinion but no one does the research. What are the risks to print medias business model? Are those risks being addressed?

The only risk is risk of loss of capital. And with Apple, valuation supports that it is very high risk. With LEE, there is almost no risk other than the fact that they need to keep up with changing technolgies. The beuaty of print media used to be stagnant technological changes along iwth the fact that they are commonly monopolies or duopolies in the regions they serve. The thing is, they are still monopolies or duopolies. The content devilery mechanism is simply evolving faster than it used to. At the same time though, capital expenditures should actual be reduced over time due to digitial media. Also, there is less paper and ink to buy. And printing for conglomoerites can become more centralized as the demand for print media reduces.

As I have posted before, the risk with print media is that the gross margins they operate under are not sustainable. Switching to digital will kill revenue and margins at the same time; they will see it as cannibalizing themselves. Management naturally will grasp on the print to keep the margins and will be slow to move to digital. It's a catch-22; embrace digital and kill the golden goose, go bankrupt; delay digital and you are delaying the inevitable and you get caught with your dick in your hands when your salespeople can no longer sell print ads.

I reiterate, I worked for a dot com specializing in digital advertising, and was purchased by a print media company, and saw it happen live.

LEE is trading at 7.2x EBITDA ttm, a healthy valuation for a print company who's revenues are diminishing.

 

[thepd7]

How much have you researched print media? It's funny. Everyone shares the same opinion but no one does the research. What are the risks to print medias business model? Are those risks being addressed?

The only risk is risk of loss of capital. And with Apple, valuation supports that it is very high risk. With LEE, there is almost no risk other than the fact that they need to keep up with changing technolgies. The beuaty of print media used to be stagnant technological changes along iwth the fact that they are commonly monopolies or duopolies in the regions they serve. The thing is, they are still monopolies or duopolies. The content devilery mechanism is simply evolving faster than it used to. At the same time though, capital expenditures should actual be reduced over time due to digitial media. Also, there is less paper and ink to buy. And printing for conglomoerites can become more centralized as the demand for print media reduces.

I haven't researched it a lot but I don't need to do research to know that newspapers are dying.

Do I need to research cameras/photography to let you know film is dying (dead)?

So the risk is that the industry is dying and to survive they will have to completely change. I'm not saying they can't do it, just that it's risky. Nikon and Canon: did it. Kodak? Not so much.