During his recent interview with CNBC, Peter Lynch explains why investors can still find stocks that have a good story today. Here’s an excerpt from the interview:
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Lynch: Well I think looking for something different. Literally something that’s a good story.
I mean who would guess TJX, a local company. would have gone up 50-fold, or Stop and Shop would go up tenfold, or Analog Devices, or Nvidia. I couldn’t pronounce Nvidia.
So you have to find a company that’s either a turnaround or a company that’s going to grow like Panera or Family Dollar Stores.
I’m not saying that buys now, but that’s what’s made our… Sears is rolled over, Kmart’s rolled over, IBM slowed down, but we’ve had new companies come along.
I mean that’s the nature. You have to be looking for new companies and look at the balance sheet.
If you can add five and five and get reasonably close to ten you should be able to look at a balance sheet and say, here’s two depressed companies, they’ve gone from 50 to three.
One company’s got three of them in cash and no debt, one’s got three of them in debt no cash, which one are you going to buy?
You can watch the entire discussion here:
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Article by The Acquirer’s Multiple.
