Warren Buffett, 79 years old, is acquiring a railroad company he expects will grow with American trade in the next few decades. As the economy starts to pick up and consumption volume increases, he believes Burlington-Northern will also build up. This bet for Buffett is an investment in a "high quality, cash generating company [that has] been left in the dust during the 'junk' stock rally". The only competition he is considering are other railroads that will have a difficult time coming into the market due to the high costs of laying down a track. Some thoughts of possible competitors will be highspeed railroads or who knows, even some kind of efficient air transportation for goods 30 years from now. And looking forward, where will Buffet be? 109 years old? He seems to be thinking about the future of his company and those he's leaving in charge. Let's hope they are just as excited about this acquisition as he is.
Group 3
WSJ article
Subscribe to:
Post Comments (Atom)
Posts
1 comment:
I believe that their are many companies that are by far a better value than railroads. A good examlpe of this is a company called Bunge Limited symbol {BG} engages in the agriculture and food businesses worldwide. The stock currently trades around 59 dollars a share. I think the stock could easily get to 450 dollars a share over the next five years. Yes you heard it right four hundred and fifty dollars a share. Assuming their are not stock splits. And what do I base this on If the companies profit margain expands from around 1.75% to 4% over the next five years and if the sales of the company expand from 54 billion to 85 billion thats growth of about 7 or 8 percent a year and if the companies stock than trades at a price earnings ratio of about 20. That would put the price of the stock at 450 dollars a share. It could even be more than 450 dollars a share if you reinvest your dividends the company pays a dividend also if the company does a share buyback this could increase the value of the stock even more. Keep in mind that their are stocks that are popular that trade at much higher price earnings ratios than 20 times earnings one example is whole foods market it currently trades at 35 times earnings. Also keep in mind that bunge is a company of really decent quality not at all a high risk stock. It has the potential to leave a company like burlington norther in the dust. I understand your skepticsm if you are reading this but go to any stock broker or financial planner CPA that knows how to value stocks and they will confirm everything that Im saying here.
Post a Comment