Interesting how you picked Mcdonalds as your example. Go back and research the negative writings towards Mcdonalds in the 1970's. They were supposedly overbuilding, its food quality was poor, and agressive new competition was taking their business. However, $10,000 invested in Mcdonalds in 1970 is worth over $1 million today.
There is high employee turnover because the company works them very hard. The employees whom I know complain that they work long days, and get few vacations. I'm with you on this issue. I think management could ease up a bit.
As far as what has happened in the past year, people in record numbers have bought shoes at Just For Feet. It still makes the list of the fastest growing companies in America every year, and earnings have been just about doubling every year since its IPO (.18 in '95, .38 in '96, .55 in '97, and estimated .95 in '98). Whether management is any good or not, the company and its earnings have grown tremendously, but the stock market can be very painfull if you overpay.
In fiscal 96 the company earned 38 cents. At $32/share thats a pe of 84. The pe now is a little under 20, which isn't terribly cheap, but it should be near fair value. My point is that the growth has been there all along, and will be there in the future. Five years from now $13/share will look extremely cheap. |
