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

To: Paul Senior who wrote (4364)	6/30/1998 7:12:00 PM
From: James Clarke	Read Replies (1) \| Respond to of 78742

You're looking for value in a bull market, you need to take a look at agriculture equipment stocks. There are four. DE, CSE, NH, AG. The leader in the industry, John Deere, trades at about 12 times earnings. The up and comer in the industry, Case, trades at about 9 1/2 times earnings. The other two, which are credible companies with growing earnings, trade at under 8 times earnings. Of course there are reasons to be scared. Corn and wheat prices are down bigtime and US farmers income should be down year over year. But they're not awash in debt as they were entering past downturns. The corn is in the ground, so a drought would raise corn prices and probably bounce these stocks about 20%. The danger is that the current crop comes out perfect and inventories are high going into next year - exports to Asia are going to be way off. I'm not recommending anything here, although New Holland looks phenomenally cheap (400 million of free cash flow versus a market cap of about $3 billion). Case also looks exceptionally cheap, although it was up today. But this is the kind of industry which value investors should be spending their time researching. Jim

To: Paul Senior who wrote (4364)	7/7/1998 7:25:00 PM
From: Spatton	Respond to of 78742

Paul Senior (Re: KRSL) In a prior life I lived in manufacturing; we would nearly kill for a 20% ROE. For this KRSL company which seems to me at first glance to be just a sophisticated machine shop -- to have 40+% ROE with no debt... sir or madam... that is against the law of nature =g=. Either there's something very, very proprietary that they've got, or they've recently completed a large order and are booking it, or there are games being played. No way are those margins sustainable. If you look at the books, you'll see accounting practices inflated 4q earnings last year. It's no secret. Taking this into consideration, KRSL has a P/E of ~13. As far as cooking the books to hide debt and artificially inflate ROE, I would say these are serious accusations that require more proof than a violation of your "laws of nature." There are plenty of DELLightful little companies that don't offer proprietary products and sustain abnormally high ROE with no debt. However, these companies trade at much higher multiples. So, in my opinion, and contrary to what you say, the value of that stock is already recognized and realized given its current price and prospects. JMO. Senior. I disagree. This company seriously lacks investor awareness. I believe it qualifies as a value play. But, who knows... we'll let the market decide. The following is a quote from an article in Forbes. I know it's your favorite. "Two of Stern's sons have improved productivity at Kreisler's manufacturing facility in New Jersey. Stern predicts that sales will grow 30% a year for the next five years..."