OK, for all of my talk about INTC, MSFT, and CSCO yesterday, I sold my INTC today. My analysis of CSCO made me look at the other two again, and I decided to take some profits. Here's what I'm looking at as a rough analysis of these three companies:
MSFT - Earnings projected at $2.68 on 6/30/2012. About $4 Cash Per Share (adjusted for Debt). At a 10% growth rate, I'd be looking at $2.68 * 10 + 4 = 30.8 compared to $26.30 current price leaves a bit of room to move (17%), at least.
INTC - Earnings projected at $1.95 on 12/31/2011. About 3.5 Cash Per Share. Looking at 10% growth rate, I'd be looking at $1.95 * 10 + 3.5 = $23 future price compared to $21.40 right now isn't much of a move (7%).
CSCO - Earnings projected at $1.86 on 6/30/2012. About $4 Cash Per Share (adjusted for debt). At a 12% growth rate (They're still predicting 12-17%), I've got $1.87 * 12 + 4 = $26.32 vs. $20 current is about a 30% move.
This is obviously a rough outline, and it doesn't take into account a couple of things at least:
1) When would the market take into account the future eps?
2) They have significant cash/share right now and will gain more over the next year (or give out dividends).
I realize these aren't crazy returns I'm looking at here, but after the run we've had, I like big companies like this with small risk/small reward for at least part of my portfolio. But, I guess at some point, like with INTC today, I'd rather take my profits and put them into other opportunities.
Thanks,
cwillyg |
