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No. of Recommendations: 5
Stock 1

Earnings growth CAGR last 10 years: 12%
Projected earnings growth CAGR next 5 years: 12%
Return on Total Capital: 33.8%
Return on Equity: 40.6%
Net Profit Margin: 33.1%
Trailing P/E ratio: 9.5
Median P/E ratio: 20
Value Line rating for Safety: 1
Value Line rating for Financial Strength: A++
Dividend Yield 3.1%
Projected Dividend annual increase (next 5 years): 17%


Stock 2

Earnings growth CAGR last 10 years: 12%
Projected earnings growth CAGR next 5 years: 11%
Return on Total Capital: 17%
Return on Equity: 19.4%
Net Profit Margin: 16.9%
Trailing P/E ratio: 19.2
Median P/E ratio: 18
Value Line rating for Safety: 1
Value Line rating for Financial Strength: A
Dividend Yield: 1.2%
Projected Dividend annual increase (next 5 years): 9%


All things being equal Stock 1 would likely be considered a better investment given the info. above; especially if you have an eye for valuation. Stock 1 is valued, based on the P/E ratio, at less than half the value of Stock 2. It's valuation seems to be indicative of a stock whose earnings are expected to falter and slow to a crawl. Meanwhile Stock 2 is valued for perfection based on future projected earnings.

The only thing likely to have steered an investor toward Stock 2, rather than Stock 1, would have to be their respective historical stock-price performance. Stock 2's stock price has appreciated significantly, and smoothy, over the past decade. Stock 1's stock price has flat-lined. Although, according to physics: a body in motion continues on it's trajectory unless another force acts on it to change it, logic dictates that the fortunes of Stock 1 must inevitably change, and for the better, provided that earnings continue on their upward path. Logic also dictates that at some point in the future Stock 2 is likely to lose the momentum of its winning streak. Past performance is no guarantee of future returns.

If I had to place my bets, logic dictates that Stock 1 — on a risk/reward basis — is likely the better bet.
You've probably guessed that Stock 2 is Sigma-Aldrich (SIAL). Stock 1 is Microsoft (MSFT).

kelbon
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