One of the biggest misconceptions in the investing world is that the merit of an acquisition should be judged by whether or not it is “earnings accretive”. The impact of an acquisition on a company’s accounting earnings is not indicative of its economic value to shareholders.
My last recommendation was new to the value-investing club (see Buy CSCO: A Treat For Value Investors). This week, I bring back a classic value stock: Phillip Morris (PM).
As detailed in “How To Make Money Picking Stocks”, quantifying the future cash flow expectations embedded in stock prices is critical to making an informed investment decision.
My mentor, Michael Mauboussin, in his latest piece: ” The Importance of Expectations – The Question that Bears Repeating: What’s Priced In?” explains more eloquently than I that the key to successful investing is to systematically distinguish between price and value – two very distinct concepts.
I explain key details behind our uniquely rigorous research process.
I also cover my top picks and pans in the “Hold It Or Fold It” portion of my interview with host Chuck Jaffe.
Really enjoyed my first edition of the “Danger Zone” for Chuck Jaffe’s MoneyLife radio show.
MGM Grand (MGM) is in the first stock to put in the Danger Zone.
For the first time in many months, both Citigroup (C) and Bank Of America (BAC) are not on our Most Dangerous Stocks list as of the release of the August report.
Exxon was my Stock Pick of the Week last week. Here is an excerpt from my article: “Buying Exxon Mobil (XOM) now is one of the easiest calls in the market these days…”
Seldom do value investors get a chance to have their cake and eat it too. And that is exactly what we have with Cisco (CSCO) stock.
Sometimes, picking stocks is easy if you focus on the basic principles of cash flows, valuation and competitive advantage.
One of the best “win-win” combinations in today’s world is Weight Watcher International’s (WTW) stock.