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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (8516)	10/4/1999 9:27:00 PM
From: Q.	Respond to of 78516

new earnings estimates for MAT: excerpts from two articles at CBS Marketwatch: The Learning Company accounts for 15 percent of Mattel's sales, said Beth Burnson, an analyst at ABN Amro. As a result, she cut her 1999 earnings estimates for Mattel to $1.18 from $1.50. Burnson maintained the toy maker's "buy" rating. Salomon Smith Barney analyst Jill Krutick ... slashed her 1999 earnings estimate to 76 cents a share from $1.35 a share and 2000 estimate to $1 a share from $1.70 a share after a talk with management indicated the problems "touch all product areas." Today's stock price of 11 7/8 looks like a p/e of 10 or 16 based on 1999 eps, depending on which analyst you choose. I nibbled today at the close after I visited a toy store and saw that they did indeed still have a big aisle of Barbie, and a bunch of HotWheels too. Just the same, I'm not fully convinced that an earnings multiple of 10-16 is a tremendous bargain for a company that looks like it might be stagnant at best.

To: jeffbas who wrote (8516)	10/5/1999 12:06:00 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78516

Jeffrey Bash: re: "A 50% gain in 2 years isn't enough for me to buy a stock". Well if such stocks buys are available and if that is not good enough for you, I must conclude you are someone who requires extreme results of his portfolio. Given that the best investors cannot make 25% on their money consistently, nor, I think, even inconsistently but on average, what is it that you do to achieve such results? (Or are you saying you just shoot for the stars to expect something a lot less?) Is it a concentrated portfolio? I don't recall seeing any studies (they may exist and be generally available, I just don't know)which show that value investors can expect such favorable results. I've seen stories of people who have specific investments that do about 25%/yr. for many years (somebody on this thread in Tyco for a dozen years; somebody on the Abbott (ABT) thread whose base cost is under $1/sh.; a drip investor in AFLAC since 1985, etc.) But these seem to be isolated investments that went roaringly well - unexpectedly and unplanned well. Graham's idea I thought was that value investing was a place to invest, not necessarily to become roaringly rich. We're all different. To me, if I had 4 stocks that I thought would go up 50% in two years, and two of them actually did and I was on board, that'd be about 12 1/2 % annual return before taxes. Given where I am, that's not bad, especially if that performance could be replicated every year. Or if the gains came before two years, which sometimes seems to have occurred in this market. Paul

To: jeffbas who wrote (8516)	10/5/1999 12:35:00 AM
From: Paul Senior	Read Replies (2) \| Respond to of 78516

Jeffrey, I don't know that MAT deserves a pe of more than 10-12. But then again, I'm one who has trouble paying more than 12 pe for any stock. Don't mean to be a relativist about it, but I do want to invest. So I have to, I think, relax absolute standards sometimes to try to get what I think will work in today's/tomorrow's environment. The way MAT jumps around on earnings, I'm more comfortable going with price to sales. If sales can hold steady or continue to rise as they have in past years, MAYBE there's a shot they can bring some profits in. (With the franchise and dominance MAT has, they ought to at some point earn some decent money and/or return to investors' good graces.) For MAT, the PSR is generally about 1.4, sometimes 1.9 or higher (yearly average). So at psr below 1.0 now, there's lot of potential (imo) for this stock to move higher.