(NYSE:AMR) AMR Corporation has high expectations for 2007. By years end, AMR is projected to have a P/E of 6.00 at its price today. Currently, their P/E ratio is around 42. This is some major growth for 2007. While, I am writing this AMR is up 2.21%. Of course, this is the day the DOW is currently up 104 points. After, a week of a minor slide in the markets.
Assuming, AMR Corporation does have the massive growth they expect. How much higher will the stock go from today’s price? At buying the stock at its price of 33.62/share. With earnings/share of 5.43 by years end. Now, we will have to figure out. What will the companies P/E be at the end of 2007? Today, the companies P/E is 42 and their forward P/E is 6.19.
What we are trying to do. Is figure out what P/E AMR be trading at by years end. To determine their future price. NOT what their forward P/E is. Next year, if AMR has a P/E of 12 with earnings/share of 5.43. The stocks price will be 65.16.
If you take AMR Corporation Ave P/E for the past ten years. You will get an average P/E of 6.08. This formula maybe skewed. Since, AMR has had negative P/E’s for many of the past years. So, I am going to take the industry’s current P/E average of 15. Just to be conservative. I’m going to take a few points off of the 15. Let’s say 11. So next year, I am officially saying, I think AMR Corporation price will hit 59.73 from 33.62. All assuming a earnings/share of 5.43
Don’t know much about stocks? And looking to invest without doing much. Today, they have long-short mutual funds. Whether the market is going up or down. Your long-short mutual fund may produce positive returns. Long-short mutual funds are allowed to buy and short stocks. Shorting a stock is an action. That will allow a person to profit. When a stocks price goes down.
Since, Long-short mutual funds may help protect your gains. You had during that bull market. While, producing more gains during a bear market. Unlike, other mutual funds.
Let’s just face it. They’re really no bargains on wall street. Even, after the recent losses in the market. I am tired, of the news telling me to look for bargains. While, the S&P500 Average P/E is around 22, give or take. Think about a P/E of 22. Is this a bargain? I wouldn’t consider this a bargain. At this rate, It would usually take several years. For the fundamentals to catch up with my investment.
With the market falling lately. It reminds me how long. It will take for the stock market to be at it’s top. Is it at the top now? Probably not. Still, I believe strongly that its coming again.
The FDA warns consumers not to eat fresh bagged spinach at this time. There has been an E Coli O157:H7 outbreak. Washing the spinach will not get rid of the bacteria. Based on the current information. Individuals who believe they may have experienced symptoms of illness after consuming bagged spinach are urged to contact their health care provider.
This has caused one death and several illnesses in 9 states, so far. 74% of bagged spinach comes from California. They currently do not know. Where the E Coli is coming from and who packaged the products.
Kroger’s has told all of their stores. To pull all bagged spinach off the shelves. As, many other stores. As of today, the grocery sector has been hit a little today. With reaction to the bad news.
The FDA states “E. coli O157:H7 causes diarrhea, often with bloody stools. Although most healthy adults can recover completely within a week, some people can develop a form of kidney failure called Hemolytic Uremic Syndrome (HUS). HUS is most likely to occur in young children and the elderly. The condition can lead to serious kidney damage and even death. To date, 50 cases of illness have been reported to the Centers for Disease Control and Prevention, including 8 cases of HUS and one death.”
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As some of you know. U.S. hedge funds are very secretive about what they do. Also, almost ‘anyone’ can create one. Which has created a large amount of backlash. From the investment community, as a whole.
With hedge funds growing a huge amount of interest. Financial services are taking a piece of the pie. Moody’s Investor Service has created new ratings for hedge funds. The ratings are not based on investment strategies or portfolio risks. Since, hedge funds are not going to give out this information. The new ratings are based on ‘operational quality’.
Here is what Kathryn Kerle, vice president at Moody’s told Bloomberg about the new ratings. “These ratings are on the manager as opposed to the fund itself. Moody’s won’t rate the creditworthiness of hedge funds or the effectiveness of an investment strategy, she added.”
Moody’s will offer hedge funds a private rating. Before, they make the ratings public. This should intice fund managers to let Moody’s rate them. Of course, hedge funds can deny the ratings. Which wouldn’t let Moody’s publish the ratings and/or review their fund.
The ratings add little value to the largest hedge funds. Why would a huge hedge fund manager let Moody’s rate them? I can’t even think of a reason. I expect to see, growing and new hedge funds participate in the ratings. To have something to tell investors and grow. So, is this really going to help? They’re too many twists and directions to figure. It’s a step into the right direction, though.
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I am sitting here at the computer. It’s pretty late and I am watching an info commercial about Bare Minerals. Which is ran by Bare Escentuals. Bare Escentuals was posted in the past in the category going public. Where the company filed a registration to trade their company publicly.
You can learn a lot about a company by watching its advertising. If I was a woman, this commercial would have me sold. This isn’t a cheesy infomercial, like all the others. It appeals to womens feelings and looks, a double combo. They make it like they are talking directly to you when selling.
They also, create the best selling factor in the commercial, Proof. They have one women, that puts on the make-up infront of the cameras. Now, I am a guy and I was still able to tell a difference. The woman didn’t need makeup. Still the differences, were exactly what they said would be.
Besides, Bare Escentuals being able to create great commercials. How good is their product Bare Minerals? I would like to know for investment purposes. If their is any women out there that has tried Bare Escentuals. Please, comment about the product.
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I am really wanting to know. Whats going on with Overstock.com, Inc. (NASDAQ:OSTK)? This company has had great revenue growth the past 5 years. They still haven’t yet turned any profit!
I am quite upset about this. This business model should be profitable. They buy merchandise from retailers/other businesses at low costs, hence the “Overstock” name. Which they turn around and sell the merchandise online. Which should be a low costs operating business in itself.
See, Overstock.com is not turning any profits. Due to their high margins on costs. Such as, costs of revenue and their selling,general, & adminstrative expenses. Okay, I understand that the company has to pay bills. I just don’t understand why this company can’t turn a profit. Out of 800 million plus in revenue a year. Is management being payed too much? Do they need to make changes to their infrastructure?
The one thing that gets me thinking and worried. Is every year, their S,G & Adminstrative expenses are always rising just above their Gross Profit. Why is this?
Let’s take a look at their S,G & A expenses at a quarterly time frame. I used MSN Money for ostk’s financial statements here. Looking at 2006 1st Qtr and comparing the expenses to 2005 1st Qtr. In these two different quarters. They earned about the same Gross Profit. You would think the S,G & A expenses would be about the same too. right? Well, guess again. 2006 S,G&A expenses are about 42% higher than 2005’s 1st quarter.
While looking at 2005 4th Qtr compared to 2006 1st quarter. Revenue here is having little effect on their S,G,A expenses.
This alone leads me to believe management is being payed, or paying out too much. Now, don’t get me wrong. This could mean Overstock.com actually has good management, but they are just struggling with expenses. Instead, something deep down tells me to dislike this company. Due to bad management.
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