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Hovering near all time highs as most companies have been churning out better than expected results but as we've been saying all -- those great earnings don't necessarily mean great revenues in fact.
Of companies failed to meet revenue estimates this quarter.
So how is slow growth impacting stock prices -- how Barings senior editor joins us how how old mr.
So what it's an interesting phenomenon wouldn't you say that we've got he's near records for stocks yeah.
Yet revenue is just a -- yeah.
It hasn't been great probably default this quarter vs a year earlier you know -- you don't have to bring in new customers in order to grow your earnings.
You can cut your costs he takes -- your cash lying around you can buy back stock retire shares fell increased earnings per share.
But if that's the only last for so long if you're not growing your revenues.
Eventually you run out of opportunities for that earnings growth or something to really -- Right now OK by the way Jack how is not on a box if you wanna get a two shot he's just he's just that big of a guy.
But you have some specific stocks though you know that are doing great in revenues great on the top as wells -- -- but before -- -- that foreign exposure.
The fact that caterpillar IBM United Technologies have been having these troubles and they have a lot of foreign exposure just at a time when it's slowing down or we're going negative is in the case of some European countries is that part of a revenue problem.
It could be you know it is.
And for a while companies were boasting about their foreign exposure because that's where the growth was not -- come back to it hurts on this cover is now some of those opportunities slow overseas.
And the other problem is you can find sales growth right now even look at Amazon you look at Netflix you can -- -- Starbucks right.
-- -- -- have to pay a high price as one as a scarcity of something and there's a scarcity right now sales growth.
Investors go bonkers for the few stocks -- you know about producing big -- those facts are very expensive and attacking did you homer for so let's work through our picks beginning with Western Digital -- our -- for valuations.
Well it investors -- -- this -- -- hard drive maker investors have written off the stock because the -- of personal computers are sliding right now we saw that in the first quarter.
But you know -- these things aren't just -- personal computers therein you know vast data storage -- things like that.
Has more computing goes the Internet David we -- watching pictures of of kittens on your smaller online music it is okay go -- who.
Consider those videos and other line up behind your home but they're somewhere they're all the data sort of -- -- Barnhart does.
Parents request individuals more of its top stock picks for 2013 it's up more than 40% since our December story it's still looks cheap -- right.
Let's look at -- because I I love this example because you look at you can't help but to think of JC -- right why has GAAP succeeded.
In building its revenue when JC Penney is fail.
Well they've been out of for a few years they've really struggled so it was JC -- bright want the ball he get it out.
Wanting gap has -- JC Penney doesn't isn't -- GAAP selling its own merchandise it's you that you go to gap that gap close at something the JC Penney is trying to move torment.
We'll get some of that closed underperforming stores they've made some tweaks merchandise I can't tell you exactly how to get the fashion right because I'm out of fashion expert.
But they seem to be doing -- good job but because sales at longstanding stores.
Rose nicely last quarter vs a year ago when they were falling so that was really turn things around the stocks to looks cheap here.
You know when you've got he's.
Blown up valuation sending is -- red -- that we could be looking at stock mark stock market bubble -- I think David -- question earlier this hour.
When there's no sales growth -- -- the one thing I worry about stocks to -- don't look very expensive relative to earnings why worry about most is that.
Corporate profit margins are at an all time high.
Now maybe things are going to stay this good for a long time fine.
But you know record -- their record earnings don't tennis they record earnings forever we have booms and we Abbas I'm I'm hoping that they'll come down and her fitness.
-- the companies are eating their seed corn by spending all the cash you have -- higher dividends.
And and buybacks as opposed to putting money back become by the way your last pick is Alaska Air we don't have time to talk about it but that's another when.
You should look at three starts from Jack cal at Barron senior -- -- thank you very much of it good to see it.
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