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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: OldAIMGuy who wrote (6899)	2/23/1999 7:30:00 PM
From: JZGalt	Read Replies (1) \| Respond to of 18928

Guess I'm sort of a pack rat. I am to some extent also. I have had McDonalds for a long time, but everytime I think that holding a stock with a p/e 39 which is expected to grow 4.8% this year and 12.6% for the next 5 years is stupid, some idiot comes along an ups the target price and the stock starts to move higher. About 6 months ago ML said it had a target of $80. Now Morgan Stanley Dean Witter raised its 12-month price target to $105 from $85. I understand their margins are increasing and so is free cash flow, but at $105 without any significant increase in earnings would put MCD at a p/e of 37 or so 12 months out. Still scratching my head as to why the market would pay that sort of multiple for McDonalds when they could buy some of the best technology companies in the world for only a slight increase in multiple. Strange. marketplayer.com BTW, I just looked at one of my "starters that grew" and thought I'd mention it. Elan is an Irish drug delivery company that is changing into a drug company. Multiple is low (for the drug group) and the pipeline is rich, but the accounting will give you nightmares as the Irish tax authority allows you to write off an acquisition in in one shot vs. spreading it out as in the US. Consequently Elan has radically swinging eps actuals which is confusing enough to give some hefty swings in the stock. I haven't bought any since August of 1996, but looking at the chart I think I should have AIM'ed this one. Solid 25% eps growing company with a conservative 12 month outlook of $100. Now trading at $77 and change. marketplayer.com ---- Dave