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#1
12-02-2005, 07:38 PM
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Re: BUD - Fools Duel
[ QUOTE ]
[ QUOTE ] little chance to grow much [/ QUOTE ] [ QUOTE ] Just no growth there [/ QUOTE ] There's that insidiously widespread falsehood again. I wish I could elaborate my thoughts better than this, but because of my job I'm not allowed to comment on these specific companies. [/ QUOTE ] I base my comments on both what I see in the real world. What interests me is at a recent dinner at a training seminar I attended there were no Budweiser orders, but there was one Michelob light order. Budweiser used to be the beer of choice and I am afraid that it is no longer "cool" to drink Budweiser. Will the other products pick up the slack? Why worry about that when you can go with a striving company like Pepsi? 
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#2
12-02-2005, 10:08 PM
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Re: BUD - Fools Duel
[ QUOTE ]
[ QUOTE ] little chance to grow much [/ QUOTE ] [ QUOTE ] Just no growth there [/ QUOTE ] There's that insidiously widespread falsehood again. I wish I could elaborate my thoughts better than this, but because of my job I'm not allowed to comment on these specific companies. [/ QUOTE ] What's the point of posting if you aren't going to say anything? Unless you are auditioning for a job as Press Sec. of the U.S.
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#3
12-03-2005, 04:23 PM
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Re: BUD - Fools Duel
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if you aren't going to say anything? [/ QUOTE ] Hi, AceHigh Here is a link to the original post I made that included this phrase. I think it's a big and widespread problem, so I was trying to draw attention to it by saying it in one thread and repeating it in another. For this specific duo, let's say Stock1 has an intrinsic value of $40 and is currently selling for $35 in the market. In 5 years we expect its intrinsic value to be in the $60-70 range. This represents a growth rate (of intrinsic value) of 8.5-12%, which is pretty good. Ignoring dividends, if we buy it today at $35, we will realize an annualized return of 11.5-15%, even better. Let's say Stock2 is also selling for $35 but has an intrinsic value of $55. If its intrinsic value grows to be $65-75 five years from now, it will have grown 3.5-6.5% per year. Not too exciting. But if we buy it at $35 and the gap between its stock price and intrinsic value closes, we will have earned between 13-16.5%. That's all I'm trying to say about BUD vs. PEP. PEP may have higher growth, but that's not enough to imply that its stock is therefore a better buy. We have to also know what its current intrinsic value is, and so far nobody in this thread has given their estimates for the difference between intrinsic value and stock price for these two stocks. (Cisco, by the way, has had fabulous growth over the last five years. Its revenue and earnings are now much, much higher than they were five years ago. It stock price, though, has declined about 75%.)
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#4
12-04-2005, 06:09 PM
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Re: BUD - Fools Duel
[ QUOTE ]
Here is a link to the original post I made that included this phrase. I think it's a big and widespread problem, so I was trying to draw attention to it by saying it in one thread and repeating it in another. [/ QUOTE ] But your post was so cryptic it didn't do that, at least I didn't understand it. Yes I like high growth stocks, among others, but that's not my sole criteria for buying. I also use intrinsic value when picking stocks. I thought it was understood when we said we like growth that included the phrase "all other things being realitivily equal". If you look at BUD it's forward p/e is almost identical to it's current p/e. I like stocks that are going to perform in the near future. So I don't like BUD. FWIW, I have a current intrinsic value of ~33 on BUD with it's price being ~43.
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#5
12-03-2005, 04:45 PM
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Re: BUD - Fools Duel
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I wish I could elaborate my thoughts better than this, but because of my job I'm not allowed to comment on these specific companies. [/ QUOTE ] I'm sure you must have posted it before, but can you remind us where you work? Thx
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#6
12-03-2005, 05:28 PM
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Re: BUD - Fools Duel
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where you work? [/ QUOTE ] A small Registered Investment Advisor near New York. We're mainly a non-custodial manager of separate accounts for individuals, institutions, pension plans, etc.; but we also have two hedge funds. I'm not allowed to post about securities we invest in or may be interested in investing in.
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#7
12-04-2005, 05:02 PM
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Re: BUD - Fools Duel
I appreciate everyone's thoughts.
The way I look at (an amateur's view) is the P/E based on next years earnings is: BUD: 17.1 PEP: 20.4 That being said BUD has marginal revenue growth and shrinking margins with no turn around that I have heard about in sight, while Pepsi should have 10-13% EPS growth. That is what may seperate me from the "pros", but I have gotten decent growth over the past few years and expect to continue to do so. I understand your CSCO example, but at a P/E of 80 a few years back, it is comparing apples to dump trucks.
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