Friday, September 18, 2009

A few upgrades (SBUX, PG)

AlphaNinja - A few interesting ones.

Piper Jaffray analyst Nicole Regan raised her opinion of Starbucks (SBUX) to Overweight from Neutral. She sees same store sales improvements adding to already improving margins.
-->> Sounds good, but the stock is trading at 23times her new 2010 earnings estimate. Way too expensive. And her price target is now $24. Yesterday it was $13. What the HELL is going on with your investing rationale when your target fluctuates that quickly, that easily.

Procter & Gamble(PG) is trading up after an upgrade from Citigroup:
"With Procter & Gamble perhaps having played nice for a bit too long - having raised prices with the hopes of boosting category profitability and yet losing market share as competitors did not fully follow - Procter & Gamble is readying itself to become more aggressive in order to win back lost market share"
--I think PG is severely undervalued. It's been among my talking points each time I point out the value in the DJIA.

As I wrote in May:
At the top of the index are IBM(10%), then XOM and CVX(combined 14%), JNJ and PG combining for almost 11%, and McDonalds at 6%. JNJ and PG are both trading at multi-decade lows in terms of PE, and could double before reaching their average median multiple. Most of the top DJIA stocks are trading at PE's around 10. Balance sheets are flush, and interest-coverage ratios are extremely healthy. I thought the upside (+50%)for the DJIA was about five times the downside at this level (-10%.)

No comments:

Post a Comment