What are you buying atm?

I’ll start; Alphabet BABA.

Why?

Alphabet. Great business on sale, buying for the long term. 10 year exp 12%+pa rtn.

Alibaba, fears overblown, great value, buying for the long term. 20%pa rtn

7 Likes

CarMax.

Who knows where bottom is and they are rationally growing share. Not a lot different than Geico’s slow creep from a small insurer to the nations 2nd largest.

Yes, bad times looks like they are here / coming. They survived the carpocalypse in 2009/2010 and they’ll probably survive this. Seems like it could be a bonanza if they come out of this relatively unscathed and hit their market share goals in their current five year goal.

5 Likes

Considering Nike. A global brand with inventory issues currently. A solid garp play over the next five years from this price. $83 at fridays close.

3 Likes

A great time to prepare a list not to buy. The market is getting shaky, the pension fund challenges at UK, and subsequent UK central bank intervention, now CS (credit Suisse) may undergo rumors, and multiple central banks intervention last week are pointing a very challenging period. Preserve the cash, the market is not going to turn V, but if it suddenly drops heavily you should be able to deploy some cash. The first step is to prepare the list, and go beyond the usual suspects like GOOGL, BABA.

7 Likes

NIke is a good shout. Thanks.

2 Likes

I don’t understand the objective of this thread.
We need another thread with grown people crying about Jim.

4 Likes

Nothing, I expect more downturn in the short to medium future. I don’t feel like the market has priced in drops in earnings.

4 Likes

Also - Fastenal in the mid $30s, Ecolab in the $120- $130s, Graco in the low $50s.

All solid companies that make real tangible things.

2 Likes

I’ve got a list, the same one I’ve had for months. I’m not buying now. I’m more concerned about political risks (both US midterm election-related and European matters of several kinds) than I am about the US domestic economy per se.

3 Likes

We need another thread with grown people crying about Jim.

Still obsessed with him?

Poor boy. I pity you.

12 Likes

I ran the numbers and bought Disney the other day at 95. Smoothed the earnings out and estimated a price of c350 in 10 years which would give a c12-14% from current valuations based on historic growth rates.

2 Likes

Political risk, is another term for people confusing their politics with investments. There is no political risk to economy in US.

3 Likes

Thank you for clearing that up for me, Kingran. Apparently, I wasted 30+ years teaching university students and conducting and publishing research about the interrelationships between politics and the US economy!

19 Likes

Perhaps then you should be able to articulate how exactly the mid-term election is going to impact the economy.

1 Like

Fastenal - was wondering about them a couple of months ago when their logo was seen regularly on the ice in the Stanley Cup playoffs. Wasn’t there some discussion about them in a topic a while back. I don’t really recall the details but suspect it was along the lines of good company richly priced.

Confession - I haven’t studied them myself. I guess I was too wrapped up in the hockey!

1 Like

Fastenal is a rarely-on-sale company. I like Fastenal because they have a really simple business and I’ve had experience with multiple Fastenal products / offerings / business segments due to my line of work.

Things I like about Fastenal:

  • Pretty easy to understand business in a super boring field - sourcing and supplying commodity items like screws, nuts, fasteners, anchors, tools, and so on plus sourcing some unique items for specific customers through their manufacturing partners.
  • Low debt. It doesn’t take a whole lot to run the company and they generally fund their own growth.
  • Consistently high return on equity, typically in the upper 20s to low 30s.
  • Large, established, sales points and distribution network. Hard to overcome.
  • Earnings growth is decent-ish, typically mid 7%s to upper 12%s.
  • CEO is making insider buys around the current price. Not a lot, certainly not a lot compared to his current holdings, but he’s purchasing.

Fastenal goes through long periods of nearly no stock price gains. Much like Berkshire. Buying when the PE is in the low 20s has generally turned out pretty well within a few years. At the current earnings run rate, buying in the lower $40s to mid/upper $30s would appear to be a decent buy historically.

All that said, Fastenal earnings will probably get utterly crushed in a recession. Peak to trough for Fastenal in 2009 was about -50%.

I’ve often wondered why Berkshire hasn’t purchased all of Fastenal. Seems to fit the bill of profitable, easy to understand, not a lot of capital needs, etc.


12 Likes

I thought so. All you could offer is, I am a smart guy trust me… you really expressed your political views and have nothing really to offer.

Fastnel looks like a great company. Very steady earner with steady growth in revs and eps. Nice stable and growing dividend which is well covered. Very high ROE, little debt. What’s not to like? The price. While it is off its all time highs by nearly 30%, it is still trading at 25x ttm eps. As you note, it traded around 18-20x EPS between 2018-2020. Given the current market turmoil, why wouldn’t you wait for a better entry point?

7 Likes

Totally agree. I have a soft spot in my heart for simple companies making simple things.

Graco and Ecolab fall into similar categories. Ecolab is a bit goofier considering it’s more of an annuity company posing as a soap and services company. They seem to have engaged in some financial engineering to grow earnings while not growing revenue but they still make simple things for simple industries.

2 Likes

Here is yet another example of self-proclaimed expert being wrong. Again, it reinforces my thinking many academic research outside of “core science” is highly suspect and of very little to no value. US higher education encourages lot of so called “research” that serve very little value. Most are just to pamper “ego”.

“it’s economy the stupid”… James Carville

2 Likes