Some stocks that I buy I consider relative values. Which as discussed here many times, is a very very dangerous way to invest (imo). I bought EXPD because I felt it had a very good history, a superb ceo, a good balance sheet, and its stock price was temporarily down because of a slowdown in Chinese growth and trade. At some point, I came to believe I was going to have to hold the stock longer than I expected I might, because the shipping/expediting business seemed like it would continue poorly for a long time, and the stock still did not seem like it was washed out (still sported a too-high p/e), so it could and might fall further. So I sold, for a loss.
As I said about Cullen Frost, "...for the Eagle Ford shale and infrastructure, I recently did step up to buy a few shares of Cullen-Frost for a tracking position...I'm interested in buying stocks of local banks involved in shale plays". I also mentioned WFC. About both stocks I said, "I don't claim either of these stocks is a value at their current prices and metrics".
When it was pointed out to me WFC was a big bank presence in North Dakota, I decided I could get the bank/shale exposure I wanted in ND, OK, and TX with WFC. Somewhat muted effect from shale though because WFC is so big and diverse, Otoh, maybe a safer bet. So as I said, I swapped Cullen for more WFC.
CLC is mediocre only on some metrics, imo. It's very expensive when I look at its historical roe. That metric is a key one for me though. CLC seems to be doing everything that a good company might do (that a good roe company with a good business franchise might do): Keep debt very low, buy back stock, increase dividends (The low yield though I don't like), have rising stated bv, expand business into new areas - geographically and in complementary businesses. Company had one eps down year (was profitable though) in past ten.
I looked roughly at the stock chart of CLC: finance.yahoo.com
What would you say... maybe a double in the stock every 8 to 10 years? Coupled with a 1% growing-slow dividend, that equals maybe 8% or 10% annual return. That is mediocre. I find that if the stock were bought ten years ago, then today, with dividends reinvested, the annual return's been a bit over 12%. Still not great. However for me -- if the company can just keep doing what it does and get its share of the filter business, and if I could buy the stock and hold on to it for ten years, I'll take it for 8% or maybe 12% -- with a shot for maybe better if the company comes through with some product breakthroughs or rides the inflationary times we may enter. For others who evaluate the possibility or probability differently or for whom 8% (12%) is too low, or too low for the risk they see, okay, the stock's a pass for them.
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MMM vs CLC: Over the long term, CLC has been a better performer than MMM (which is a surprise to me)
finance.yahoo.com^GSPC
I hadn't considered MMM. Last time I looked I found it too expensive.
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I'm generally not subject to buying a stock because I spent so much time researching it. More likely, my situation might be I'll quickly see that a stock falls into a style box that I'm interested in (yield/gaarp/growth/thesis/value) and I'll rather impulsively begin buying a few shares. |
