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New Constructs CEO David Trainer on why investors should consider NetApp and Apple for their portfolio.
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-- our next guest says the good old days the markets are behind -- darn you -- but some good buying opportunity still exist David trainer.
Constructs CEO joins us now David you know.
Couple chart -- of them have to be doing exactly what it did before the start of an almost twenty year bull run in the markets but that's not gonna happen here.
I don't think so I think carried our twenty year bull run it's not too far back in the in the rearview mirror and -- -- we've had some great markets of the last ten years and I think going forward it's gonna be slow and steady she goes.
All right you got to picks -- -- net -- -- can have beaten up lately right.
That's right that appliance CEO -- -- bucks for implies that its future profits are going to be.
20% lower for ever there -- they are at the end of last year and I think that makes the stock.
Way too cheap.
The got a 50% return on invested capital so you talk about a really profitable great business that's not gonna see a permanent -- -- profits anytime in the near future so.
Begin a great company at a great price OK so that's twenty dollar stock now David where all the be a year from now.
-- I think it'll be significantly higher -- I shy away from doing -- prices because I think that implied a little bit.
Too much predictive power and you know on the other hand I would I like to focus on where I think the market expectations are too low or too high and so you negative you never know what -- it and upping it because I've seen stocks that.
You know -- I've told people to -- short like Starbucks go down -- eight bucks and then turn around go back up the sixty bucks you know so.
They overshoot on the down -- they overshoot in the upside yeah tell you is that from -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Now know what I'm telling you that it's priced as if it's gonna decline by 20% permanently.
That means you're gonna -- -- that they're probably gonna decline by 20% you're gonna see at least 1520% upside from where it is now I mean.
It's not -- and -- -- election get at least 1520%.
Out of a stock a little game and I think something that's.
-- -- -- apple -- up good 20% here now like and that David trainer now.
Apple here at the 101000 analyst to recommend apple but I wanna ask you one quick question on that.
How much of this stock is so great because the business is so great.
And how much of the stop is so great because people just love it and if they fall out of love the -- no -- no matter what the earnings or -- are doing.
Dennis -- -- tell you that the stock is great about a 155%.
Because the business is so great.
To what most analysts myths when you look -- the footnotes in the balance sheet -- an example for you find good stuff not bad stuff.
And we see is it that business -- -- 270%.
Return on invested capital.
That means every dollar they spend on new products they're gonna turn back.
Two dollars and seventy cents to investors or shareholders while there's not another company -- size in the world that comes close to that so.
You know right now and in my model I show that the current stock price implies -- profits are gonna be about 5% lower than consensus.
So consensus supplies about 40% growth this year the current stock price implies is gonna grow about thirty.
OK so it's already priced for -- growth.
The what the market expects and beyond next year's growth the market but the price is not -- any future growth.
Aren't so.
At today's prices apple showing it's gonna grow about 30% from where was at the end of last year right and never grow again.
Are -- grandmother finally David.
But we're -- day only to integrate call I can think it can't go up forever apple and yet -- keep being wrong thank you very much David trader new constructs we want.
