Paying Attention to More Than Just Stock Market Value: Researching Company Variables Important to Long-Term Investment Growth

Wall Street Transcript

67 WALL STREET, New York - March 14, 2013 - The Wall Street Transcript has just published its Investing Strategies Report. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Long-Term Investing - Value Investing - Longer-Term Investing - Bottom-up Investing - Global Investing - High Quality Companies - Investment Strategies -

Companies include: Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), FedEx Corporation (FDX), United Parcel Service, Inc. (UPS), Google Inc. (GOOG), Apple Inc. (AAPL), NVIDIA Corporation (NVDA), Corning Inc. (GLW), Charles Schwab Corp. (SCHW), Wal-Mart Stores Inc. (WMT), Costco Wholesale Corporation (COST), Family Dollar Stores Inc. (FDO), Expeditors International of Wa (EXPD), Automatic Data Processing, Inc (ADP), Bank of America Corporation (BAC), Paychex Inc. (PAYX), Amazon.com Inc. (AMZN), Nokia Corp. (NOK), CBS Corporation (CBS), Martha Stewart Living Omnimedi (MSO), The New York Times Company (NYT), The Coca-Cola Company (KO), Cracker Barrel Old Country Sto (CBRL), Mosaic Co. (MOS), BP plc (BP), Clean Harbors Inc. (CLH), Potash Corp. of Saskatchewan, (POT), QUALCOMM Inc. (QCOM), Nike Inc. (NKE), Newmont Mining Corp. (NEM), Timken Co. (TKR), DuPont Fabros Technology, Inc. (DFT) and many more.

In the following excerpt from the Investing Strategies Report, an expert portfolio manager discusses his portfolio-construction strategy and his investment philosophy:

TWST: If you were giving advice to a general investor, what would you say?

Mr. Edgerton: I would tell them what they need to know if they wanted to make themselves smart, but most people don't want to do that. Value Line is probably the king daddy of structured publication that you can learn who the best company is. If you read Value Line for seven days in a row you would know the differences in Newmont Mining (NEM) and DuPont (DFT); you know the difference in Timken (TKR) and steel and Facebook. First, I'd give you that encyclopedic knowledge of companies so that you could relate, and then I'd tell you to read Barron's every week, and read the Journal every day and read Forbes and Fortune when it comes in.

TWST: What is the most interesting thing happening in the stock market right now, in your opinion?

Mr. Edgerton: Maybe the most interesting thing going in the stock market right now is a titanic battle in the cellphone and smartphone business. It's a battle between Samsung and Apple. Apple has a market value of about $430 billion, $440 billion; if you back out the cash, the stock market says Apple's worth $300 billion. They're generating between $40 and $50 billion in cash a year, so depending on which figure you take, that stock is selling at about six times cash flow.

If they keep generating the same amount of cash they are now, which people think their growth rates are going to slow down, but if they generated $50 billion in cash in the next six years, they're generating enough cash to buy back the whole company. Now, how does Tim Cook manage a business with Steve Jobs no longer behind the scenes, what they do with their cash? Do they raise the dividend? Do they buy back more stock? It's fascinating stuff, it's about as predictable as who is going to beat who in the NCAA...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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