Brad, I'm long CLE, and since I'm unable to value growth companies precisely, my valuation is supect, but I believe that $28 is about right.
With regard to IBM, and any other company for that matter, if you strip out extraordinary items, and then focus on what is driving profits, it's not that difficult to get a picture of what's going on in any company. The problem with IBM is lack of top line growth. That means that profits will stagnate once all the cost reductions have been realized. IBM does not look interesting to me because it has not demonstrated an ability to grow sales. Now, compare that to CLE which shows growth in same-store sales, in expanding the number of stores, and in acquisitions. All of these are plusses.
Now throw in a reduction in costs (presumably because of lower cost Asian products), and I think you have a winning business. But none of this tells you where the stock price will go.
Regards,
Paul |
