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#1
12-01-2005, 06:18 PM
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BUD - Fools Duel
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#2
12-01-2005, 06:30 PM
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Re: BUD - Fools Duel
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#4
12-02-2005, 11:32 AM
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Re: BUD - Fools Duel
Owl,
What is your estimated range of intrinsic values for BUD & PEP? Where do you expect their IVs to be in 5 years? And combining those two thoughts (and assuming that 5 years from now IV=stock price), what would your expected return be for each investment?
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#5
12-03-2005, 08:58 AM
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Re: BUD - Fools Duel
[ QUOTE ]
Owl, What is your estimated range of intrinsic values for BUD & PEP? Where do you expect their IVs to be in 5 years? And combining those two thoughts (and assuming that 5 years from now IV=stock price), what would your expected return be for each investment? [/ QUOTE ] By the way my investment strategy is very very simple. I see Pepsi has performed well for the past five year with solid earnings gains and the momentum is continuing unlike Bud who is currently in a rut. I am not smart enough to figure out if a company is going to turn things around so I search for companies that are priced at a discount that are growing at a reasonable rate. Do I think Pepsi is super cheap at this moment? No, but in trying to stay diversified it fills a nice niche. I don't expect to be super rich, but expect to hum along with 10-15% gains/ annually.
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#6
12-09-2005, 02:19 AM
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Re: BUD - Fools Duel
Growth is only one component of value.
The company's stock market value is $33.4 billion. It returns $2.6 billion per year to shareholders via stock repurchases and dividends. That's a 7.8% rate of return right there. When you consider that the value of assets in place will increase at the rate of inflation and that unit volume will increase (slowly) over time, it looks like a (nominal) rate of return of 11-12% over the long haul is pretty much a slam dunk. And it's not as if shareholders need to bear a lot of risk to earn that return. Market share leadership, brand name recognition, partnerships with key equity investees, the best distribution network in the biz, shareholder-oriented management that displays skill and restraint in deploying capital, etc etc.
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#7
12-09-2005, 07:03 AM
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Re: BUD - Fools Duel
[ QUOTE ]
When you consider that the value of assets in place will increase at the rate of inflation [/ QUOTE ] Since when do assets increase in value? Assets decrease in value through wear and tear and/or becoming obsolete.
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#8
12-10-2005, 03:34 AM
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Re: BUD - Fools Duel
If retained earnings are used to keep the plant and equipment in working order, the beer-making capacity of BUD's capital stock should stay about the same as time passes. And the nominal value of that plant & equipment will increase because the nominal price of its output (beer) will increase.
Obviously, vats used to make beer will eventually wear out. But I would hazard a guess that they will retain their usefulness to a greater degree than, say, the machines used to make panels for Dodge trucks. It's not as if all capital equipment wears out at the same rate, whatever GAAP rules on depreciation may say.
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#10
12-02-2005, 11:35 AM
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Re: BUD - Fools Duel
[ 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.
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