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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 78.88+1.2%Dec 8 3:59 PM EST
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To: GVTucker who wrote (67028)2/11/2005 9:04:13 AM
From: Dave   of 77400
 
While I'd agree that the Fed model shows stocks sharply undervalued, PE ratios are still in the top decile historically.

I'm not sure if anyone focused their research on this, but haven't companies' Return on Capital increased over the past couple of decades?

Of course, part of this increase is due to off balance sheet activities such as Financing transactions. However, isn't another portion of the increase due to technology and advanced in Supply Chain issues and the like?

If a company's ROC begins to increase due to said efficiencies and ignoring "off balance sheet" activities, that implies that their cash generation increases, all else equal. As cash generation increases given that their money isn't tied up in W/C causes the PV of their future cash flows to increase.

Would you happen to have easy access to older data which could prove or refute this hypothesis?

Dave
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