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

To: E_K_S who wrote (29038)	11/19/2007 1:48:38 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78666

HD. Assuming forward looking 15% ROE, it's not really a buy. Assuming 20% ROE, it is. It has shown >20% ROE in the past, but the question is how sustainable that is going forward. I am not sure HD acquisitions in 2006 and divestiture this year were well timed. At least I can say that they complicate year to year comparisons and evaluation of the remaining company looking forward. For me, the question always was: would buying HD and WMT be a flight to quality? is it an opportunity to get these companies at cheap prices? And in the last 7 years most of the time the answer was "no". At least looking at their performance for these years. But then if you compare them to KO, PEP, MSFT, JNJ, none of these companies have been hot recently either. So I don't really know. :( - I am raising this question, since I believe that "quality" stocks may be bought at higher valuations than "generic" stocks.

To: E_K_S who wrote (29038)	11/19/2007 4:11:17 PM
From: Mark Marcellus	Read Replies (1) \| Respond to of 78666

They do own all of the real estate for its stores Not exactly. They have a significant amount in Operating Leases - which means they sorta, kinda own it but it's off the balance sheet and not as liquid as straight ownership. This isn't unusual for a retailer, but it's something that should be kept in mind. I wouldn't be surprised if Mr. Lampert makes a run for HD. I won't be happy about it, but I won't be surprised.

To: E_K_S who wrote (29038)	11/20/2007 12:58:32 AM
From: Dinesh	Respond to of 78666

One negative about HD is that its revenue is all US-based. There is little to hide under from the falling dollar. Another negative is that there is no driver for taking it out of its doldrums. Eventually, methinks, the Congress will take some steps to assist the suffering homeowners but that's not going to happen right away as the rate reset train has not started yet. None of this of course is a revelation, so is it all baked in? IMHO, yes. There also seems good opportunities for writing covered calls ad nasueam. BTW, I noticed someone already mentioned presence of operating leases in footnotes. So they do rent, too. And, no, it's not kind-a sort-a owning the place. Regards