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Strategies & Market Trends : Value Investing
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To: E_K_S who wrote (29038)11/19/2007 1:48:38 PM
From: Jurgis Bekepuris  Read Replies (1) of 78661
 
HD. Assuming forward looking 15% ROE, it's not really a buy. Assuming 20% ROE, it is. It has shown >20% ROE in the past, but the question is how sustainable that is going forward.

I am not sure HD acquisitions in 2006 and divestiture this year were well timed. At least I can say that they complicate year to year comparisons and evaluation of the remaining company looking forward.

For me, the question always was: would buying HD and WMT be a flight to quality? is it an opportunity to get these companies at cheap prices? And in the last 7 years most of the time the answer was "no". At least looking at their performance for these years. But then if you compare them to KO, PEP, MSFT, JNJ, none of these companies have been hot recently either. So I don't really know. :( - I am raising this question, since I believe that "quality" stocks may be bought at higher valuations than "generic" stocks.
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