What Did You Buy Today?

[Otter]

(05-04-2020, 02:53 PM)EricL Wrote:

(05-04-2020, 02:46 PM)Otter Wrote: PFE has grown earnings by an average of 4.85% annually over the past 20 years (as far as I can go back in FAST Graphs). 20 years ago, PFE traded at $45.15 with a P/E north of 43. Today it trades at $37.71, but with a P/E of around 13.2. If PFE had traded at a rational earnings multiple of 15 or less 20 years ago, investors would have enjoyed positive total return over the intervening 20 years (although not market-beating). 

The chart for PFE (and a lot of other bubble stocks from the late 90s) is a helpful reminder any time I am tempted to buy DG, MSFT, WMT, and many others I would like to own, at present valuations.

I get what you are saying completely, but not sure why DG is named there. It's growing EPS at a double-digit rate and has a PE of 23 on FY21 estimates of $7.52 in earnings. It's expensive, but not outrageously so considering its growth rate.

DG has grown earnings annually by an average of 16.24% over the past decade, with the highest rate of earnings growth over that period concentrated in the first half of the 2010s. Current P/E of 25 is more than 35% higher than its average P/E over the same period of 18.48. Future earnings forecasts, while healthy, are for earnings about 25% below the historical 16.24% growth rate. BBB credit rating, while technically investment grade, doesn't leave them many notches above junk in the event that something disrupts their business model (have seen a lot of unanticipated disruption for other businesses lately, and I can't predict the future). All of that, plus an all-time-low dividend yield of 0.83% means that the company just doesn't pass my value screen. I'm okay with paying for growth, but there's a limit to the premium I will pay.