Essential Takeaways From Chapter 13 of The Intelligent Investor: A Comparison of Four Listed Companies

The 13th chapter of "The Intelligent Investor" presents an analysis of four companies to provide practical insights.

Graham bases his analysis on four prevalent live examples at the time of writing, including:

ELTRA Corp

Emerson Electric Co.

Emery Air Freight

Emhart Corp.

Graham explains that the most striking fact about these companies is that the current price/earnings ratios vary more widely than their operating performance or financial condition. He further clarifies that this happens because of the "superior growth" of the profits of the favored companies.

Graham analyzes these companies by looking at key ratios that relate to performance and price. He establishes six criteria for analysis:

profitability
stability
growth
financial position
dividends
price history

Graham concludes that careful investors should avoid overenthusiasm for good performance in earnings and in the stock market.

Graham considers Emerson Electric to be a "goodwill giant" and emphasizes that high valuations entail high risks.

On the other hand, Emery Air Freight has a price-earnings ratio of almost 40 times, which means that conservative investors must work through potential adverse developments before committing.

ELTRA and Emhart, according to Graham, are solid companies with “sufficient value behind their price." These companies have long histories of healthy returns on capital and stability of profits.

Graham emphasizes that the sound basis for preferring ELTRA and Emhart to Emerson and Emery would be the client’s conclusion that he preferred value-type investments to glamour-type investments.

As for the four companies' histories since 1973, Emerson Electric Co. still exists and is listed on the New York Stock Exchange.

Emery Air Freight, unfortunately, encountered turbulence, and its operations were shut down in August 2001 due to unsatisfactory fleet maintenance.

ELTRA Corp was sold to a firm that became the Allied Signal Corp in 1980, which was later purchased by Honeywell Inc.

Emhart Corp. was acquired by Black & Decker in 1989, and several of its brand names were subsequently sold to other entities.

In summary, Graham focused on six key issues when analyzing companies in Chapter 13: profitability, stability, growth, financial position, dividends, and price history. He advises investors to avoid overenthusiasm and carefully evaluate potential adverse developments before making a commitment.

Comments

Hu.ma.ne: Building Advanced AI Systems for Human-Machine Collaboration

Hu.ma.ne is a technology company that is focused on building advanced artificial intelligence (AI) systems that are capable of emulating human-like cognitive abilities. The company's mission is to create AI that can understand and interact with humans in a more natural and intuitive way, enabling new and more powerful forms of human-machine collaboration. Cognitive Computing: Emulating Human-Like Intelligence Hu.ma.ne's technology is centered around the concept of "cognitive computing," which involves using AI systems that can process and analyze data in a way that is similar to how humans think, reason, and learn. This approach allows for more sophisticated AI applications that can perform complex tasks, such as natural language processing, computer vision, and decision-making. Augmenting Human Intelligence: Enabling Insightful Decisions One of Hu.ma.ne's primary areas of focus is on developing AI systems that can be used to augment human intelligence. For exampl

DoNotPay: The World's First AI Lawyer Providing Affordable Legal Assistance to All

Artificial intelligence (AI) has revolutionized the way we interact with technology, from smart home devices to personalized recommendations. Now, AI is transforming the legal industry with the introduction of DoNotPay, the world's first AI lawyer. Created by entrepreneur Joshua Browder, DoNotPay aims to provide affordable legal assistance to people who cannot afford traditional legal services. In this article, we will explore how DoNotPay works and how it can benefit users. What is DoNotPay? DoNotPay is an AI-powered chatbot that provides legal services. The platform uses natural language processing and machine learning algorithms to understand users' legal issues and provide personalized advice. DoNotPay is accessible through its website or mobile app and is available 24/7. How Does DoNotPay Work? DoNotPay works by asking users a series of questions about their legal issue. The chatbot uses natural language processing to understand the user's situation and provide persona

Essential Takeaways From Chapter 9 of The Intelligent Investor: Investing in Investment Funds

Chapter 9 of The Intelligent Investor by Benjamin Graham delves into the topic of investing in investment funds. Graham offers insightful questions and describes things that investors should be wary of when it comes to buying into an investment fund. Investment-Fund Performance Graham opens the chapter by generalizing about investment-fund performance as a whole. He suggests that the average individual who has invested exclusively in investment-fund shares in the past ten years has fared better than the average person who made direct common-stock purchases. Graham also notes that investors who open brokerage accounts with the idea of making conservative common-stock investments are likely to face inconvenient influences in the direction of speculation and speculative losses. These temptations should be much less for the mutual-fund buyer. Questions for Investors Graham sets out a number of questions that investors are likely to ask themselves when considering investment-fund purchases,

Think Fin

Search This Blog