Dividend Growth Forum

I just started an account for my 10 year old daughter. Wanted to add 5 names to the portfolio. So far bought her MRK, PEP, JNJ and LMT

I cant choose between AAPL and MCD. Just wanted to know which one you would choose to hold over the next 5+ years? I was thinking AAPL just to have a tech name. Thanks

(09-13-2019, 08:52 AM)kblake Wrote: [ -> ]I just started an account for my 10 year old daughter. Wanted to add 5 names to the portfolio. So far bought her MRK, PEP, JNJ and LMT

I cant choose between AAPL and MCD. Just wanted to know which one you would choose to hold over the next 5+ years? I was thinking AAPL just to have a tech name. Thanks

Me personally would choose MCD. I just think they have great technology and keep innovating, where as AAPL just keeps coming out with the same old products. Plus stock has been up a lot.  Now they are coming out with a $5.99 Apple TV plan. Everyone loves the news, but I'm a bit skeptical. 

BTW I wish I never bought MO. I  may just sell it today. Too much over hang on the JUUL news and Trump now getting involved.

Started a position in CAT this morning.

Also added to my OZK position.

(09-13-2019, 08:52 AM)kblake Wrote: [ -> ]I just started an account for my 10 year old daughter. Wanted to add 5 names to the portfolio. So far bought her MRK, PEP, JNJ and LMT

I cant choose between AAPL and MCD. Just wanted to know which one you would choose to hold over the next 5+ years? I was thinking AAPL just to have a tech name. Thanks

At these prices none of those two. Both are close to 1 year highs, however, MCD is very overvalued, unlike AAPL, but on the other hand MCD is one of those boring companies I'd like to hold as a div growth investor. Just not at these levels. I will actually sell my stake if something of interest appear.
Your other four picks seem very reasonable though!

I disagree with MCD being over valued. Company is killing it. Every time I drive by a MCD the drive through's are packed. Quick service, quick food is what people want these days. Lets not forget the app and now the touchscreens they have inside. I have seen price targets of $130-$150. I think the run continues. I actually bought some on the dip at $207 last week. I would much rather own MCD in this kind of environment. Its a bit of a safety stock as well. Those value meals come in handy in a recession lol

Honestly if its for your daughter. Own both the names. Invest in companies she can follow and enjoy. AAPL has had a big run but its still cheap based on growth and PE. We will see how the news AAPL TV does. I think it will put a dent in Netflix.

I like the 4 names you bought as well

MCD is a great company, and executes well, but $161 Billion multinational behemoths just don't grow at a rate sufficient to justify a P/E of 26.57, even when you are willing to pay somewhat of a premium for quality and scale. It is way above its 10yr average P/E of 20.55 (roughly 30% above its average valuation). 

I'm usually willing to pay $15 for a dollar of a company's annual earnings (a P/E of 15). Paying 76% more than that is too rich for me. This is a company I would very much like to own, but I guess I'll have to wait until the next significant pull-back. 

You can’t base your decisions on past. I learned that the hard way. All those companies I thought we’re over valued cost me money. Wall Street is always looking ahead. You have to pay up for growth and future growth. MCD is growing fast and no one can touch them in sales. Forward PE is only 19 so that’s not bad at al. They also pay $1.13 dividend. I own it and plan on holding for many years.


I can name 100 companies that are way over valued but keep hitting new highs. A lot of times the stocks that look cheap are cheap for a reason.

That chart service you use. You pay a lot?

(09-13-2019, 04:00 PM)stockguru Wrote: [ -> ]You can’t base your decisions on past. I learned that the hard way. All those companies I thought we’re over valued cost me money. Wall Street is always looking ahead. You have to pay up for growth and future growth. MCD is growing fast and no one can touch them in sales. Forward PE is only 19 so that’s not bad at al. They also pay $1.13 dividend. I own it and plan on holding for many years.


I can name 100 companies that are way over valued but keep hitting new highs. A lot of times the stocks that look cheap are cheap for a reason.

That chart service you use. You pay a lot?

I pay 9.95/month for Fastgraphs. The easy visualization of value is very helpful to me as a starting point for making purchase decisions. Chuck Carnevale (creator of the service) has had some very helpful posts on Seeking Alpha explaining how to use it effectively, and explaining his stance on value (I tend to agree with him when it comes to theories of stock valuation). 

I'm always skeptical about future earnings prospects and analyst estimates. Analysts and companies have proven historically terrible at predicting the next big downturn that trashes both the P and E side of their equations. That said, Fastgraphs does include analyst earnings estimates in its graphs (the part of the P/E lines that extend forward into the future). Consensus analyst estimates are for 2020 and 2021 earnings growth rates substantially below the double-digit growth rates notched in 2016-2018. If you assume those consensus estimates are correct, and assume that MCD will eventually trade back to its historical average of a 20.55 P/E, its current stock price is still 7% higher than it should be by year-end 2021, 9 quarters from now.

MMM offers a great example of how quickly a high-flyer can turn around once those first cracks in the armor and less-than-stellar earnings estimates start rolling in. The stock was a darling of wall street during 2017, and the positive articles flowed freely on Seeking Alpha. Stock price was also running way ahead of its historical average P/E. The reversion to mean has been brutal for people who bought in near the top. Those people probably have a very different opinion of their shareholding than the folks who recently bought in the $160s (or even a brief dip under $160):

Agree MCD is way overvalued. Rode it up for 40 quick points but pigs get slaughtered. I'll wait for re-entry. I only had to wait 15 years for a couple stocks to get me back to even. It's going to be more like 20+ for INTC and CSCO. Sure I sell some stocks too early, or never buy them. I'll take that over avoiding port devastation. It only has to happen to you once. MMM is a good recent example of a stock that could take a decade to get back to even. KMI is loved here. Five years later and it is still under 50% of it's last peak, and we just had a couple decent oil price years that may or may not be ending for awhile. Paying a huge premium for a mature company will get you burned. It's not 1970 anymore for stocks like MCD and DIS. You can't just pay any price.

I would never buy MMM. They are no longer a growth company. And as long as tariffs are a threat, they will continue to suffer and hit new lows. I don’t need a graph to tell me that lol. Yes it’s cone off the lows but that won’t last. Just a rotation going on right now.

Thanks for the info. I will have to check them out.

I sill say MCD hits $230 by years end.

Here’s another example. A lot of you bought ABBV and GILD $10-15 higher then where there trading at now. I heard there so cheap? Trading at historic low PE. That didn’t work out too well lol. Just saying you never know. Sometimes it’s a crap shoot.