Graham works well to ballpark equities like this. Using your numbers and a 5.5AAA (WAG because the thing doesn't really exist anymore) Graham spits out 96.
Cheers Clarke - I tried to keep it relatively simple, but the potential over-valuation on a lot of names is pretty crazy....even from a more "Munger" approach to pay up a some for premium companies. Incredible companies like COST trading in looneyville. Was positive that RSG must not be a trash company anymore when I looked at its chart this week - nope, just trading at 30x's!
I've been at this long enough to remember when MCD was selling at 1/3 of it's Graham number. You'll find roughly the same thing with MCD now as with HSY.
Ha- yeah one of my first 'big' buys with my own money was the old Philip Morris around when the DJIA peaked in early 2000....think it was at something like 6-7 times earnings and well covered yield close to 9%. There was a freakout with all the state tobacco settlements at the time, if memory serves.
Graham works well to ballpark equities like this. Using your numbers and a 5.5AAA (WAG because the thing doesn't really exist anymore) Graham spits out 96.
Cheers Clarke - I tried to keep it relatively simple, but the potential over-valuation on a lot of names is pretty crazy....even from a more "Munger" approach to pay up a some for premium companies. Incredible companies like COST trading in looneyville. Was positive that RSG must not be a trash company anymore when I looked at its chart this week - nope, just trading at 30x's!
I've been at this long enough to remember when MCD was selling at 1/3 of it's Graham number. You'll find roughly the same thing with MCD now as with HSY.
Ha- yeah one of my first 'big' buys with my own money was the old Philip Morris around when the DJIA peaked in early 2000....think it was at something like 6-7 times earnings and well covered yield close to 9%. There was a freakout with all the state tobacco settlements at the time, if memory serves.