January 25, 2020 04:29 PM RSS

Buy Low & Sell High Mortimer!!!

  • Wall Street Rebel | Geoff Garbacz
  • 12/13/2018 5:57 PM
Buy Low & Sell High Mortimer!!!
This morning Merrill Lynch finally recommended Proctor & Gamble (PG). Clearly, the Merrill Lynch analyst was asleep and finally woke up. That is the problem with Wall Street these days.

The best and the brightest on Wall Street no longer work on the sellside. Rather they have gone to the buyside. Proctor & Gamble is the latest example of how clueless Wall Street has become. 

Our process at Superstock Investor is to buy low and sell higher but the Merrill Lynch analyst clearly wants to buy high and sell low. After today's upgrade, the stock closed at $96.49.

The stock bottomed on May 2nd at $70.73. That was after it fell from $94.67 in September of 2017. Now after climbing some $26 points the analyst likes it.

Well at least the stock began the year at $91.88 so it is up only $4 for the year. The P/E on the S&P 500 for next year is at 15 which is not crazy. 

Yet, currently Proctor & Gamble will make $4.05 this year and then $4.72. 
This gives the stock a P/E of 23.81 for this year and 20.44. Yet at the low in May those P/Es were 17.46 and 14.98. A much more reasonable value. 

Next time you want to buy a stock off  a recommendation from a Wall Street analyst we suggest running the numbers like we just did. You might be surprised what you learn!

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