Grupo Televisa S.A. is the largest media company in the Spanish-speaking world, and a major player in the international entertainment business. It has interests in television production and broadcasting, programming, direct-to-home satellite services, publishing and publishing distribution, cable television, radio production, show business, feature film and internet portal.
Grupo Televisa [NYSE:TV] Jan. 30, 2009 close: $13.99
52-week range: $12.99 (Oct. 24, 2008) - $28.12 (May 19, 2008)
Dividend: Varies. Last 12 months = $0.36137 = 2.58% current yield
As noted above, this company is the world leader in Spanish language media with a diverse mix of television, radio, publishing, movies and more. A multi-year court case seeking damages from Univision (which distributes content from Televisa) was recently favorably settled with Grupo Televisa to receive approximately $585 million in additional revenues from Univision between now and the contract’s endpoint in 2017.
Covance [NYSE:CVD] Jan. 21, 2009 close: $37.97
52-week range: $31.43 (Nov. 21, 2008) - $99.08 (Aug. 7, 2008)
Covance is one of the world’s largest Contract Research Organizations. They conduct clinical trials for big pharmaceutical companies on an outsourced basis. Early stage testing represented about 47% with clinical phase II – III contributing another 17% of revenues. Bio-manufacturing, lab services, clinical packaging and other health services make up the remainder of their sales. CVD likely came in with record revenues of about $1.8 billion in 2008 and EPS should also be an all-time high at about $3.02 versus $2.71 in 2007.
Covance is in great financial shape with just $23 million in short term debt coming due and zero long-term obligations. They held $209 million in treasury cash at the end of the September quarter.
Because earnings have grown steadily and dramatically since 2000 Covance has been considered a glamour-type growth stock. The P/E has reflected that with a 10-year median multiple of 26x. The lowest average P/Es on a full year basis occurred in the 2002-2003 bear market at around 18x.
Apple Around $50 /share Might be a Core Holding
NDQ:AAPL 2:30 PM EST price: $82.75
Could this be another example of our economy’s “Jobless Benefits”?
The news of Steve Jobs medical condition sent the shares of Apple tumbling after hours yesterday and in today’s regular session. AAPL shares have traded in a 52-week range of $79.14 - $192.24.
As of September 27, 2008 the company held almost $25 billion in cash or about $27 - $28 /share with no debt at all. Deduct $27 from the current quote and the business itself is selling for $55.75 /share. With trailing earnings of $5.36 for the FY ended last September that means AAPL shares are just over 10x operating earnings if you factor out their cash.
Worried about the “Jobs Report?”
Take a longer term view out to January of 2011 and sell a put or two at lower than today’s price.
Strike ….………..… Bid ……… Net Cost if Exercised
$60 ……………… $13.00 …………….. $47.00
$70 ……………… $17.50 …………….. $52.50
$80 ……………… $22.80 …………….. $57.20
While nobody can assure you that Apple shares will not be below your net purchase prices from the above list I can tell you that their shares have not traded hands below $79 since 2006. Even in 2006 the absolute low was $50.20 and EPS for the 2006 FY (ended Sep. 2006) were $2.27 or just 42.4% of FY 2008’s final number.
Disclosure: Author sold AAPL puts today as described above.
Last April I wrote the following article about Burlington Northern:
Blasphemy: Burlington Northern Shouldn’t Be Held
By: Paul Price April 21, 2008
Go ahead and attack the thought. Sell a Buffett stock? Am I nuts?
Read this and you decide.
Berkshire Hathaway started reporting buys in Burlington Northern (BNI) a year ago in early April 2007 with 1.646 million shares for an average price of about $81.37/share. Buffett and Berkshire bought quite a few times after that by averaging down. Their last reported purchase was on January 22 at a price of $75.51 /share.
At today’s price of $99.77 these shares now trade at 16.8x estimated 2008 earnings of $5.90 - $6.00 and about 14.7x 2009 estimates of $6.75 - $6.80. The current yield on BNI shares is a historically meager 1.28%.
PepsiCo: [NYSE:PEP] Jan. 12, 2008 (9:45 AM: $51.98)
52-week range: $49.74 (Nov. 21, 2008) - $79.79 (Jan. 10, 2008)
Latest Quarterly Payout = $0.425 = 3.27% current yield
PepsiCo has four main business divisions- Frito-Lay North America, PepsiCo Beverages NA, Quaker Foods NA, and PepsiCo International. 2008 will be the 14th year of the past 16 to show increased EPS and the seventh straight year of rising sales per share. Cash flow, book value and dividends paid will all finish 2008 at all time highs.
The balance sheet looks great with $1.859 billion in cash on hand as of September 6th – an amount that handily exceeded the total short term debt due within the next five years. Value Line rates PEP’s financial strength as an ‘A++’ their highest rank. Value Line also rates PepsiCo in the 100th percentile in both ‘stock price stability’ and ‘earnings predictability’ [with 100 being best]. Beta is a very low 0.6. PepsiCo’s ROE has ranged between 26.8% and 37.7% in each of the past 11 years.
Intuitive Surgical [NDQ:ISRG] Jan. 9, 2008 Close: $101.80
52-week range: $99.75 (Jan. 8, 2009) - $357.98 (Apr. 10, 2008)
Intuitive Surgical developed and launched the da Vinci Surgical System for non-invasive surgical techniques. In 2000 it became the first robotic surgical system to be cleared by the FDA for general laparoscopic* surgery.
*Laparoscopic surgery, also called minimally invasive surgery (MIS), band aid surgery, keyhole surgery, or pinhole surgery is a modern surgical technique in which operations in the abdomen are performed through small incisions (usually 0.5-1.5cm) as compared to larger incisions needed in traditional surgical procedures. Laparoscopic surgery includes operations within the abdominal or pelvic cavities, whereas keyhole surgery performed on the thoracic or chest cavity is called Thoracoscopic surgery. Laparoscopic and Thoracoscopic surgery belong to the broader field of endoscopy.
ISRG had its IPO on June 13, 2000 at a split adjusted price of $18 per share. As with many IPOs back then the company was not yet profitable and after a quick surge to $38.10 the share price retreated to the single digits during parts of 2001 – 2003 before becoming solidly profitable in 2004.
Coca-Cola [NYSE:KO] Jan. 8, $44.60 (9:45 AM)
52- Week range: $40.29 (Oct. 10, 2008) - $65.59 (Jan. 10, 2008)
Dividend = $0.38 quarterly = 3.41% current yield
This company needs no introduction. Approximately 74% of sales and 77% of profits came from outside North America in 2007. Coke is one of the most consistent and predictable consumer stocks available today. Including the just concluded 2008, EPS grew in 17 of the past 19 years with the last negative year-over-year period coming in 1999 when earnings were off from $1.42 to $1.30. Since then each of the nine years has shown growth with EPS expected to have come in at $3.12 for the year ended Dec. 31st.
Consensus estimates revolve around $3.27 - $3.29 for 2009. That puts KO shares at just 14.3x last year’s and < 13.7x forward earnings. This is the lowest valuation of these shares since just after the crash of 1987. In fact, the 10-year median P/E was (in my view) an excessive 26x and the 5-year average annual P/E from 2003 – 2007 was 20.9x.
Berkshire Hathaway owned 8.6% of the shares as of last March’s proxy statement.