I still have BBY on my watch list. I moved EMR off that list today when I started a small position. Several times in past I've missed what turned out to be buying opportunities when Emerson hit temporary lows. The stock is still expensive on many measures imo, but compared to past multiples of p/sales and p/earnings, EMR's about as "reasonable" as this company has gotten in a while. (But in this dropping stock market and this economy and this going-to-war mentality, who knows what's reasonable or if the current price is only a temporary low?). Two negatives I note (there are more), are that the company made a big bet on being a supplier to the telecom sector (ouch), and debt (as in debt/equity) seems to be trending up (increasing).
EMR's had a wonderful multi-decade history of earnings and dividends under the leadership of Charles Knight. His leadership methods have been used as case studies by business students. At 65, he's turned over CEO responsibilities, but he's still there as Chairman.
quicken.com
Aside: I'm trying to take this "opportunity" in the current down market to increase the "quality" of stocks in my portfolios. Yet I'm not exactly sure why I'm doing this, or what this "quality" improvement even means. To me, owning stock in a "low quality" company doesn't have to translate to low chance of making a profit with its stock. I guess I am just getting tired of seeing so many bankrupt,near bankrupt, or walking-wounded stocks in my portfolios. EMR's not a great value at current price, and it's not risk free either. (They announce surprising and really bad earnings, maybe the stock could do an EDS.)
Perhaps it's just that I'd like to have more positions in solid, dominant companies that are widely followed, have reasonable growth prospects and might be selling at a reasonable price, while paying an okay and growing dividend. For me, Emerson fits.
Paul Senior |
