The valuation of MCD’’s stock implies the company will grow its after-tax cash flow (NOPAT) by less than 10% over its remaining life. I think market expectations are too low, especially when the company’s return on invested capital (ROIC) is so high at 14.5%.
We recommend investors avoid all utility sector ETFs. There are no ETFs in the utility sector with an attractive-or-better rating. None of the ETFs rank better than the S&P500.
Investors should sell the following dangerous-rated utility sector ETFs:
ProShares Ultra Semiconductors (USD) is our top pick among the 25 ETFs we analyzed for our 3Q11 update on the “Best & Worst Tech Sector ETFs”.
The consumer staples and information technology sectors are tops among the ten major sectors. Both get our “attractive” rating. Our Sector Roadmap report ranks and rates all of the 10 sectors. It also benchmarks all sectors against the S&P 500, which gets our “neutral” rating and the Russell 2000, which gets our “dangerous” rating.
Accounting rules provide the biggest loopholes to asset intensive businesses. And the off-balance sheet operating lease loophole is one of the biggest.
By exploiting this loophole, Starwood is able to omit nearly $1 billion in debt from its balance sheet in 2010, $200 million (20% of the total) was added in 2010.
The valuation of NUE’s stock implies the company will grow its after-tax cash flow (NOPAT) by nearly 20% compounded annually for 20 years.