By now most of us have been brought to the attention of the rising P/S of SP500, it seems the current equal-weight P/S ratio has nearly doubled over the last 10 years. I did some research on the top100 companies (by weight — I had to search each ticker and record the numbers manually, that's why I couldn't do all 500) and did the following:
- Record 3Y, 5Y, 10Y, 15Y and 20Y P/S
- Measure against current P/S as %
- Sort by lowest % on 3Y, 5Y and 10Y
- Filter out anything over 85%
| vs 3Y | vs 5Y | vs 10Y | vs 15Y | vs 20Y | |
|---|---|---|---|---|---|
| Paypal | 50% | 54% | |||
| 62% | 57% | 53% | |||
| Netflix | 63% | 63% | 69% | 77% | 83% |
| Starbucks | 71% | 74% | 75% | 80% | 85% |
| Adobe | 76% | 80% | 88% | 96% | 104% |
| Salesforce | 76% | 79% | 81% | 82% | |
| Disney | 78% | 82% | 87% | 94% | 103% |
| 3M | 78% | 74% | 76% | 80% | 82% |
| Citigroup | 81% | 77% | 78% | 81% | 76% |
| Pfizer | 81% | 81% | 85% | 89% | 91% |
| Intel | 82% | 81% | 83% | 82% | 81% |
| IBM | 84% | 80% | 76% | 75% | 75% |
My rationale is, anything under 100% vs 3Y, 5Y and 10Y means they have not “doubled over the last 10 years”, hence off the Burry radar, which may mean they are better value among their peers?
Then I use Morningstar's Fair Value, while it may not be the best calculation, I reckon with the same methodology applied to these companies, it should still give some meaningful comparison. I keep companies with at least 70% of Morningstar's FV:
| Fair Value | Current | Current$ of FV | |
|---|---|---|---|
| Paypal | $145 | $102 | 70% |
| $400 | $210 | 53% | |
| Adobe | $615 | $420 | 68% |
| Salesforce | $320 | $196 | 59% |
| Citigroup | $78 | $51 | 65% |
| Intel | $65 | $46 | 70% |
Worth mentioning that P/S of C is 1.24 (max 1.64) and INTC is 2.43 (max 3.00). So of the six above, perhaps Citigroup and Intel are now reasonably priced to enter?
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