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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1855  
Subject: Re: WAG to add clothing line Date: 4/4/2008 9:19 AM
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Now that I take a closer look at WAG, I see that my internal rate of return on this holding is continuing to drop. It has only been out of the single digits one year out of the last four. It has been closer to 5% than the historical S&P return of about 10%. Boy did this one sneak up on me!

If you pay any attention to the BMW method, now is the time you should be buying WAG, not selling.

http://invest.kleinnet.com/bmw1/stats20/WAG.html

The share price has not followed the historic CAGR of the company, which happens. As you can see, if you bought between 1999 and 2002, you were buying at "the top", and you have held through a long period where the stock did not appreciate, but the company profits did. Unfortunately, "the market" has not recognized that yet - but it will. It always does.

Indeed, as you can see, now is about the best time to buy it as has been had in the past 20 years, based on the deflection between historic price versus growth characteristics. (Of course there is no way to compute "the future", and if the company is suddenly facing challenges from another competitor or from macro-economic forces, then all bets are off. If, however, this is just Mr. Market misjudging the value/price, then now is a good time to buy. Or hold.)

I have my Walgreen's from back in 1994, so I'm holding, although the last five years have been disappointing. In fact I'm sitting on a bunch of cash, waiting for the market to finish its correction (which I judge has not happened yet, but then I've been wrong before), WAG is probably one which I will look at for additional investment. YMMV.
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