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Staples, Inc. Message Board

  • ladyhothand ladyhothand Oct 17, 1998 10:55 PM Flag


    I'm short spls and long omx in a two for one
    ratio as of friday
    open and pleased but let's see
    what the upcoming week brings
    Fell that if funds
    quit buying she will decline and If funds
    need to
    raise cash she will decline, pe is larger than my ...

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    • Im trying to decide what to do with my stock??

      • 1 Reply to obug
      • >>SPLS has been trading at a
        P/E of around 40-50<<

        Before the bear
        market a lot of stocks were too high..."New Era"
        thinking, and all that..... That's changed.
        p/e multiples are strictly bull market phenomenons,
        leaving zero margin of safety** for mild recession or
        other disappointment.

        20x is about the most any
        stock in the highly competitive, highly
        recession-sensitive retail business deserves.
        Staples doesn't
        have the exclusive patent on a cure for the common
        cold, after all -- they're just a retailer selling
        paperclips and computers.

        A 20 p/e on '99 estimate of
        .99 is generous, and as much risk as anyone should be
        willing to take on in this market. Anything above that is
        gambling and/or blind love.

        **Benjamin Graham
        --Warren Buffett's famous teacher and mentor
        suggested in his classic investment textbook that if you
        had to boil investment wisdom down to three words,
        they should be: "margin of safety" -- a concept
        usually all but forgotten in bull markets.

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