Nothing, I expect more downturn in the short to medium future. I don’t feel like the market has priced in drops in earnings.
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Also - Fastenal in the mid $30s, Ecolab in the $120- $130s, Graco in the low $50s.
All solid companies that make real tangible things.
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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.
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We need another thread with grown people crying about Jim.
Still obsessed with him?
Poor boy. I pity you.
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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.
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Political risk, is another term for people confusing their politics with investments. There is no political risk to economy in US.
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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!
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Perhaps then you should be able to articulate how exactly the mid-term election is going to impact the economy.
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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!
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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.
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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?
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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.
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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
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Surprise! The thread “Share the pain” is still alive: Share the pain 😲 - #69 by WEBspired, Chinese stocks are no investable!! What has changed this past week?
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How do you feel about DIS now? Considering it myself.
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‘rationalwalk’ used to be a valued poster on the BRK board, but some time ago he (she?) quit and started their own website https://rationalwalk.com
I have no affiliation with the site.
I subscribe to their free weekly newsletter, ‘rational reflections’, and I greatly enjoy the commentary, even more so now that Jim (mungofitch) no longer posts on the BRK board. I just thought other people might like to know about it.
They also have a paid “Business Profiles” service, which they explain isn’t a stock tip service, but consist of in-depth profiles of companies that they find interesting. These interesting companies might, or might not, be worth an investment at some indeterminate point in time, but that decision is left up to you after reading their insightful analysis.
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I think Disney+ is seriously underwhelming. Compared to Netflix, Prime, it sucks big time. But they keep adding users; At what point users will get tired of Disney+? I think they are seriously canabalizing their TV users (Kids) with Disney+ and will hit maturity much earlier and will see bigger churn. Of course, that is my view, and there is no data (in their results) that is supporting that view.
Ive just subscribed to Disney+ the Marvel franchise is excellent I’m hooked! Horses for courses 
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We have Verizon cell service. They recently upgraded us to unlimited data with Disney+ and Hulu, ESPN and actually lowered our cost. I wonder how many of us Verizon users contributed to the Disney+ increase in subscribers.
Not amazed by it, but am not a movie person. After a few days of binging on the superhero movies, DH rather lost interest as well. Hulu is a different story. Very well organized, keeping track of what’s next in your viewing of a series and letting you know when new episodes come up. Can’t be said for all streaming platforms. We also gave up our Amazon Prime subscription, since we were not using the streaming or radio anymore and you still get free shipping when ordering anything over $29, IIRC. Left with the most recent increase in Prime.
IP
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