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's unbelievable what happened, said Jack Brod, who has operated Empire Diamond and Gold Co. in New York's Empire State building for over 50 years. When gold was over $700 an ounce and silver over $40 everybody wanted to buy it. Today nobody does.~August 12, 1981 Deseret News
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