What the market is paying currently

This is part two for those who valued the mysterious company in the previous post found here: http://csinvesting.org/2011/11/29/what-would-you-pay/

NVS_VL

and NVS_25

Not knowing the company or the price of the stock can keep you clear-headed and away from stories. There is no one right valuation since it depends upon your discount rate. But Buffett said your goal as an investor should be to acquire as many compounding machines at good prices as you can.  I will venture to say that if you can buy 15 to 25 companies with 10% free cash flow yields, steady historical performance with decent (greater than 12%) returns on assets, relatively clean balance sheets, growing 4% to 8%, you will do well over several years.

Nothing is guaranteed, but the odds are against strong, steady and stable companies collapsing while you own them. Some may disappoint but chance favors you.

Now if you look at the company you will hear the stories: pharmaceutical companies are struggling, Europe will collapse, the price has gone sideways for years………….etc., etc.

Find another 19 more of these and you have one heck of a portfolio–IMHO.

Let’s revisit this in two years.

6 responses to “What the market is paying currently

  1. I have a potential candidate for the rest of the portfolio…..

    A company with $5.7 in after-tax free cash-flow. Sales,cash flows,EPS and dividends and book value have grown about 9% over the past 10 years and are estimated to continue growing 7% over the next few years. Debt is 39% of total capital. Ret. On total capital has averaged 18% over the past ten years; return on equity has been 25% on average. Dividend yield is 3.6% and 40% of net profits.

  2. Please add it to the portfolio of compounding $$ factories.

    I will post it (with your name and contact infor if you wish) plus I can additional info such as Value-Line or other material.

    Thanks.

  3. Please post it. The company is ABT

  4. thanks. I wanted to disclose that account(s) I manage have a long position in ABT.

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