The Boeing 787 “Dreamliner” finally took flight with much fan fair. In anticipation, Boeing Co.’s (BA) stock has risen off of lows and currently is valued at almost 35 times earnings. Headlines can be very misleading and lead investors into overvaluation traps.
Today’s FRAT™ Videx™ looks at Boeing based on fundamentals as well as a competitor or two.
Best when viewed in full youtube screen.
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For a clearer view, use FRAT™ VidEx™ (click to open in full screen)
Making investment decisions based on price movement alone can be very dangerous. Headline hype can be even worse. It’s important to look at how price measures up to fundamental values.
The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.
Tags: BA, Boeing Co., GD, General Dynamics Corp.
Posted in Earnings Growth, Fundamentals, Valuation | Comments Off
In football parlance it’s often said that the best offense is a good defense. That adage aptly applies to today’s investing climate as well. We all know the best time to invest is when prices are low. Buy low, sell high is the foundational principle of investing. This seems hard for investors to do, because the news is always gloomy when stock prices are low. Conversely, by definition, the time when prices are dangerously high is also when buying stocks is most popular. As Warren Buffett has often said, “You can’t buy what’s popular and expect to do well.” It’s important to consider that under the rules of supply and demand, when prices are highest, so is demand and vice-versa.
Most people see the aerospace and defense industry as deeply cyclical. Therefore, during a recession both their businesses and their stock prices are expected to be down. In truth however, both cyclical and growth stocks can be found in the aerospace and defense industry. Today’s FRAT™ Videx™ will feature two attractively valued growth stocks that are in the aerospace and defense industry; you don’t want to miss it.
FRAT™ VidEx™ (click to open in full screen)
The author manages portfolios owning LLL and COL.
Applying fundamental values to cyclical stocks is most difficult. Getting the timing perfect is only possible through chance. On the other hand, investing in cyclical stocks during the late stages of a recession is an often profitable strategy for the investor with the long-term view. What defines cyclical are stretches of strong and weak business results. Common sense implies that weak periods end with strong periods. Therefore, the best time to buy cyclical stocks is when their businesses are bad. The best time to sell is when their businesses are good. Because of the inherent lack of consistency, I prefer to not invest in cyclical stocks. However, if I were to invest in them, I would only invest in the later stages of a recovery like today for example. Further, I would keep in mind the Wall Street Rule: Sometimes bulls win, sometimes bears win, but pigs never do.
Tags: BA, Boeing Co., COL, L-3 Communications Holdings, LLL, LMT, Lockheed Martin Corp, NOC, Northrop Grumman Corp, Rockwell Collins
Posted in Valuation | Comments Off
The Dow Jones Industrial Average was created by Charles Henry Dow in 1896. Originally comprised of 12 stocks then expanded to its current 30, the Dow 30 stock index was created to measure the performance of the whole stock market and as a gauge for the economy as well. As fallout from the recession and recent bear market, icons of American business are being removed. First AIG, the financial services and insurance giant, was replaced by Kraft Foods on September 2008. Next on June 8, 2009, Travelers will replace Citigroup and Cisco will replace General Motors. There is much debate and controversy as to whether Cisco and Travelers were appropriate substitutes. However, Robert Thompson, the Managing Editor of the Wall Street Journal has the final say on the matter.
Since the Dow 30 is an established and accepted proxy for both the general stock market and economy, I thought it would be interesting and enlightening to look at these 30 blue chip icons of American business through the perspective of the Fundamental Research Analyzer Tool (FRAT). By organizing essential fundamentals at a glance, this powerful software will provide insights and validation to the several principles this blog is dedicated to. For clarity I have broken this post into three parts with each covering 10 of the 30 Dow Companies.
In order to receive the maximum benefit from these FRAT™ Videx’s™, I suggest you might consider pausing the video on each company. This will allow you to more closely scrutinize each company at a more leisurely pace. I believe this information provides numerous insights into several investing practices and the principles behind them. You will discover insights into valuation, the importance of earnings and much much more. Click on Today’s FRAT™ Videx™ and discover a perspective on the economy and the stock market that may surprise and enlighten you.
FRAT™ VidEx™ (click to open in full screen)
I hope you found part one of this three part series valuable. The 30 Dow stocks are being presented in alphabetical order, tune in tomorrow for the second set of 10. If you are finding this information of value, please share it with a friend. This blog is free and offered as an educational service. Please help us spread the word.
Tags: 3M Co., AA, Alcoa Inc, American Express Company, AT&T Inc, AXP, BA, BAC, Bank of America Corp, Boeing Co., c, CAT, Caterpillar Inc., Chevron Corp, citigroup, CVX, DD, E.I. du Pont de Nemours and Company, Inc., MMM, T, Travelers, TRV
Posted in Valuation | Comments Off