"P/E currently sitting around 13 with latest earnings. Can anyone else foresee a good turnaround in share price coming soon?"
To paraphrase W. Buffett: If you want to buy a yogurt cone, do you want the price to rise or to go low? Obviously, you want the price to be low and even go lower so you can get a bigger bite of a quality product for less money.
To move this analogy closer to purchasing shares, there are two other factors to consider:
1. What is your time frame? If you are a day-trader or like to trade in and out of your stock purchases based on several days or weeks of momentum, then the analogy does not work. Also, it does not work if you are really close to cashing out for some reason--e.g., need the cash for a retirement annuity or to buy a house soon. But, if you are a long-term investor, the analogy works.
2. Is the product--in this case the company business structure--extremely high quality. I only want to take bites of extremely high quality companies. Is this the case for YF? Another way of writing this is: Does the history and current management practices and strategies indicate that YF will show superior revenue and earnings growth into the next, say five years? (Remember, proven revenue and earnings growth drives share prices over lengths of time.)
So, if the answer to question 1 is "long" and 2 is "yes," then the current low share price is cause for joy! Eat! Eat! You look so thin! (I was raised by a Jewish-Italian mother.) Stuff yourselves and you'll grow fat. I am a long-term investor and so am most interested in question 2. I am not so interested in the augury of short- or intermediate-term share prices. Actually, I have saved some more cash recently and am looking to take some bites of high quality companies. Should I buy a YF? It's on sale now. Will I grow fat and happy? <G>
Ciao,
David Todtman |
