"INTC and WDC are not my type of companies (low ROE)."
WDC is really not _that_ low for ROE, but... I've come to use a suite of "return on" calcs including total capital, Greenblatt's version of the calc, and a few marginal calcs for return on marginal capital. WDC is really pretty decent there from what I see, but it doesn't have much moat/barrier to entry other than it's one of the last standing (albeit in shifting industry that requires constant execution).
INTC doesn't look as strong from return standpoint, but I give leeway to gorillas and it does look better using Greenblatt's return on tangible capital measure. The Magic Formula approach is the first time I really started liking INTC, and the market position gives them a few extra points in my book, but valuation is huge part of my interest. I'd love to see INTC improve in ROE and some of the marginal capital measures, but I think that may be why they're trading at 11.5 multiple right now.
RE: AFAM/LHCG. Yeah, I can understand staying away. It's hard to know what the bottom is on these, but I'm guessing in the end home health is a much cheaper solution than alternatives, and these stocks have already been beaten down pretty badly. Bottom could be lower but I'm in here. FWIW it seems like AFAM "wants" to go up more than LHCG. I've read some things indicating that AFAM was billing more conservatively than AMED which seems focus of investigation.
Again, all of these are likely trades for me and I'll look to rotate out to other positions when price is right. I've been in several of these for a while - particularly MSFT which is my largest holding. I thought it'd be to 30 by now but the market just doesn't believe. Could be telling me I'm wrong on it. |
