eBay appears to be a very solid company that should intrigue value investors that classify themselves as Enterprising Investors. The company does not qualify for the Defensive Investor due to the current ratio not quite reaching the 2.0 requirement, the lack of dividend payments, and the high PEmg and PB ratios.
Archives for January 2014
Dominion Resources, Inc. does not qualify for the Defensive Investor or the Enterprising Investor. Like most utilities, it has a poor current ratio, so it must pass the remaining requirements for the Defensive Investor, but in this case the growth over the ten year period has been insufficient, the PEmg ratio is too high, and the PB ratio is too high.
There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I’ve selected five of the most undervalued companies reviewed by ModernGraham. Each company has been determined to be suitable for Defensive Investor according to the ModernGraham approach. This is a sample of one screen that is included in
Abbvie appears to be a company with prospects for becoming suitable for the Enterprising Investor in a few more years; however, at this time it is not suitable for either the Defensive Investor or the Enterprising Investor. Intelligent Investors following the ModernGraham approach based on Benjamin Graham’s methods are very cautious investors, and choose to rely only on the most accurate data possible.
CA Technologies looks very good in the ModernGraham approach based on Benjamin Graham’s methods for value investors. The company passes the requirements of the Defensive Investor, failing only the current ratio requirement, and as a result is suitable for both Defensive Investors and Enterprising Investors.
Bed Bath & Beyond Inc. is an extremely interesting company for value investors. It is not suitable for the Defensive Investor, by not paying dividends and by trading at a high PB ratio, but it is suitable for the Enterprising Investor because its balance sheet and earnings history are strong enough to overcome the lack of dividend payments.
When we last looked at Caterpillar Inc., it was suitable for both the Defensive Investor and the Enterprising Investor, and was undervalued. In the last 3 months the conclusion has not changed, though the market has brought the price up 9.72%.
Kimberly Clark Corp has exhibited solid growth over the historical period, but it does not qualify for either the Defensive Investor or the Enterprising Investor. The Defensive Investor is not interested because the company’s current ratio is too low and the stock is trading at high PEmg and PB ratios.
Whole Foods is an excellent company that must be on the watch list of all Enterprising Investors. The company may not qualify for the Defensive Investor, due to a current ratio that isn’t quite high enough, a lack of a solid dividend history, and high PEmg and PB ratios, but the company passes the requirements of the Enterprising Investor with a perfect score.
Goodyear does not qualify for either the Defensive Investor or the Enterprising Investor. The company has a poor track record when it comes to earnings stability over the last 10 years, a critical requirement of the Defensive Investor that when combined with the company’s low current ratio, poor dividend history, and high PEmg and PB ratios, eliminates the company from the Defensive Investor’s list.