AT&T, Steelcase
AT&T may very well be a good investment, or it may not. Its not an industry I follow closely. What I do know is that it has doubled in the last two years. That's hardly what a Buffett investor looks for in a stock. And it is in an industry which I defy you to tell me what it looks like two years from now, let alone Buffett's standard of ten years. The RBOCs, the cable companies and the internet are all threatening ATT's business. Oh, but AT&T has gotten into cable and the internet. Great and exciting, but Buffett is looking for businesses that aren't changing. This one changes every two months.
Contrast this with Steelcase, the leader in the office furniture market. This is an industry that is growing over time, and Steelcase is the leader in it. A very reasonable valuation. SCS is the ticker. The company does not have the Buffett history of high ROE, but the industry does. The industry doesn't change much over time. It is very unusual for the leader of an industry to have lower profitability than the industry as a whole. If you research the company's history, you will see why. This is where you find your triples. This is a stock I would still buy today, even though it is well off its low. I think if nothing changes this is a $30 stock in a couple years. If they do what competitor Herman Miller did five years ago, it is a $70 stock in a couple years.
jjc |
