Mark Murphy: ‘FORBES’ latest issue has a small piece on Harley Davidson, where FORBES admits that its P/E ratio of 38 is high, but that they still think it a stock worth considering. No matter what the financials are on a company, how could a company with a P/E as high as 38 be worth considering?’
☞ My first thought is that Malcolm Forbes, irrepressible to the end, is irrepressible even after the end. He was crazy about motorcycles. Other than that, if FORBES didn’t answer that question re Harley Davidson, I can’t either.
Generically, of course, you’d eagerly consider a company with a P/E as high as 38 — or even 83, for that matter — if you thought that, yes, it was selling at 38 times trailing 12-month earnings but just, say, 5 times your expectation of 2003 earnings. Or if it happened to own rights to a soon-to-be-approved cancer cure. Or if it held suddenly valuable drilling rights along the coast of Florida.
But remember, sensible as it generally is, Forbes has to fill 200 pages every couple of weeks. It’s hardly infallible.
Quote of the Day
It was only 80 years from the time Darwin published ON THE ORIGIN OF SPECIES until we detonated the first nuclear bomb. In the lifetime of one person, we went from figuring out where we came from to figuring out how to get rid of ourselves.~Paleontologist Jack Horner
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