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Great company. Not cheap. Trades at 20X earnings. Feels MasterCard (MC-N) is in a little better situation because it is not as global. Doesn’t have a very strong dividend yield and doesn’t think this is going to change over the next a while. Growth is not only coming from the developed world where we are moving away from cash, but in the developing world as people get wealthier and they are moving away from cash. There is lots of growth. Try to buy on a pull back.
Expects this will do well and this is not a bad level to Buy it at. Nice dividend yield. One of the issues you have to face is that GE Capital drove its capital giving it a very high return on equity. GE Capital has been scaled back dramatically over the last 10 years. You are not going to get the multiple that it was trading at before. He is expecting the industrial sector to really pick up over the next couple of years.
A problem he has with this is that its competitor UPS (UPS-N) trades at a much lower PE, has a higher dividend, trades at a higher price to free cash flow and has higher net margins. You are paying for a higher multiple for a company that is not as good. Regardless, the company will do well because the economy is improving globally. Consider rotating into UPS.
Failed the stress test. Gets a little bit worried that there is some lack of clarity in how the organization is executing. This has not been one of his favourite stocks. You have to remember that this is not a bank that is spread out through the US; it really is a bank in New York state. Has a great overseas franchise.
Has done incredibly well and is massively overpriced. Has made a lot of acquisitions over the last little while and paid a lot of money for them. Finds it very hard to understand this company as a business model because there is just not the need to buy things. Advertisers are there because they have a billion people, but not sure people are looking at that advertising. Doesn’t expect this will be would grow like Google (GOOG-Q) which has grown incredibly well.
Over the last year or so, it has run up a fair bit and is now trading in the range of 15 or 16 times earnings and dividends have come down. A problem he has with pure pharmaceutical companies is that they are very dependent on their pipelines. Pipelines in this business are still pretty good, but unfortunately they are not big blockbuster drugs any more. He prefers something like Johnson & Johnson (JNJ-N) which has pharmaceuticals, medical devices and consumer products.
A problem with the life insurance businesses is that it is very hard in this low interest environment for them to make money. Stock has come back because the environment is a lot better for equities which have helped a great deal. Have a very strong franchise in Asia. Would prefer to be in banks.
A great story. Has a great franchise in the US on the retail side. Has a great investment banking franchise through Merrill Lynch. Has a great asset management business from the broker business. He can see them executing incredibly well through 2014, especially if the stock market continues to do well. Earning power potential is very strong.
What is good is that there has been a consolidation on the drink side, but there is still room for more consolidation. Have some great brands. What has hurt them in the last little while is that they have gone through a period were margins had been compressed because they had to spend a little bit extra on marketing, especially in Asia. The fruits of this have not come through as yet.