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BUY ON WEAKNESS
How much to buy this as an entry point? At $106, it's in a mid-high multiple, which is a little rich for him, but then again, it's done very well under a high multiple. They have transitioned very well from software to the cloud. Their CEO has done a masterful job. He'd prefer to see this priced lower, but he's not sure he'll see that.
computer software
processing
PAST TOP PICK
(A Top Pick Dec 19/17, Up 12%) Has owned this since 2006 and been a big winner for him though its valued has halved three times. The lesson: big patient and look at the big picture. They have 1 billion installed devices in the world and a 93% loyalty rate, so they will continue to do extremely well. Their growth rate will ebb and flow, but they tend to be in a leadership position, investing $15 billion a year in R&D. Pullbacks like now are an opportunity. Their services business does $40 billion revenue a year which is all of Facebook's revenue. It doesn't get the multiple it should.
electrical
electronic
STRONG BUY
How important is the holiday season? Very. They compete against UPS. Great at execution. Shipping/transportation is now an e-commerce story including international and express deliveries. People expect things to arrive instantly now. FedEx boasts 150,000 trucks and 650 airplanes. Trade at 14x earnings, not expensive. they have pricing power. This is a jewel. He'd add to it.
Transportation
DON'T BUY
Huge red flags. A shame. There's open talk about whether they can survive. They have to divest; they have no free cash flow. Their power operation is doing poorly, so it'll be hard to sell. He's long been critical of GE and its former CEO. The new one is capable, though he can only do so much. At best, GE is speculative.
electrical
electronic
TOP PICK
TOP PICK
He sold it when DIS spun their wheels with ESPN and ABC, but re-bought it earlier this yearly when they did a deal with 20th Century Fox to get into the streaming business. Disney and Fox have amazing film libraries--and DIS also got 60% control of Hulu. A lot of traction here. (Analysts’ price target is $122.30)
entertainment services
BUY
vs. Church & Dwight They make household products like Arm & Hammer. They've grown organically half to 66% of their growth rate, and have made tuck-in acquisitions to boost that rate. Trades at a high-20s multiple which is too high for a consumer products company with their growth limited. Instead, look at Helen of Troy (HELE-Q) who distribute Revlon, Sunbeam and Dr. Scholl's and are trading at half the CHD multiple with the same growth rate.
misc consumer products
