Results From My Future Price Calculator: MSFT, JWN, KO, CAT, IBM

Last night, I decided to write a simple program that would calculate a stock's past EPS growth rate, and take into account current EPS, average P/E, and some other fields, and spit out an apoximated rate of return and a price that would represent the stocks dollar value a decade from now.
I'd been doing the calculation the old fashioned way, and finally decided to expedite the proecess with a program. Generally, we like stocks that can give us above a 14% annual compounded rate of return not including dividends. Here are some of the results:


Microsoft Corporation (Public, NASDAQ:MSFT)

year 1.........EPS: 1.74
year 2.........EPS: 1.97
year 3.........EPS: 2.22
year 4.........EPS: 2.51
year 5.........EPS: 2.84
year 6.........EPS: 3.21
year 7.........EPS: 3.62
year 8.........EPS: 4.09
year 9.........EPS: 4.63
year 10........EPS: 5.23

Estimated price a decade from now given past growth rate: $102
The estimated annual rate of return (no dividends) compounded is 13.0%


Nordstrom, Inc. (Public, NYSE:JWN)

year 1.........EPS: 1.81
year 2.........EPS: 2.12
year 3.........EPS: 2.48
year 4.........EPS: 2.9
year 5.........EPS: 3.4
year 6.........EPS: 3.98
year 7.........EPS: 4.65
year 8.........EPS: 5.44
year 9.........EPS: 6.37
year 10........EPS: 7.45

Estimated price a decade from now given past growth rate: $156
The estimated annual rate of return (no dividends) compounded is 16.2%


The Coca-Cola Company (Public, NYSE:KO)

year 1.........EPS: 2.97
year 2.........EPS: 3.27
year 3.........EPS: 3.59
year 4.........EPS: 3.95
year 5.........EPS: 4.35
year 6.........EPS: 4.78
year 7.........EPS: 5.26
year 8.........EPS: 5.79
year 9.........EPS: 6.37
year 10........EPS: 7.0

Estimated price a decade from now given past growth rate: $119
The estimated annual rate of return (no dividends) compounded is 7.7%


Caterpillar Inc. (Public, NYSE:CAT)

year 1.........EPS: 2.41
year 2.........EPS: 2.72
year 3.........EPS: 3.07
year 4.........EPS: 3.47
year 5.........EPS: 3.92
year 6.........EPS: 4.43
year 7.........EPS: 5.01
year 8.........EPS: 5.66
year 9.........EPS: 6.4
year 10........EPS: 7.23

Estimated price a decade from now given past growth rate: $181
The estimated annual rate of return (no dividends) compounded is 11.8%


International Business Machines Corp. (Public, NYSE:IBM)

year 1.........EPS: 11.65
year 2.........EPS: 13.98
year 3.........EPS: 16.78
year 4.........EPS: 20.13
year 5.........EPS: 24.16
year 6.........EPS: 28.99
year 7.........EPS: 34.79
year 8.........EPS: 41.75
year 9.........EPS: 50.1
year 10........EPS: 60.12

Estimated price a decade from now given past growth rate: $782
The estimated annual rate of return (no dividends) compounded is 19.8%


Remember now, these are just estimates, and by no means should you go out and buy a stock just because it's supposed to have a good rate of return. In fact, I can say with a fair ammount of certainty, that IBM will not be able to keep up it's pace over the next decade. The last bubble and recession skewed the data slightly, and don't even TRY to estimate the rate of return for banks like BAC and Citi. Nor should you trust it's results for new faces like Apple Inc. (Public, NASDAQ:AAPL), or Google Inc. (Public, NASDAQ:GOOG), as you'll get ridiculous growth rates.
All that being said, a prudent investor should always try and make their decisions devoid of emotion. This is a nice little screen if you want to invest LONG TERM in WELL KNOWN, LARGE CAP companies.
Remember to use diligence on all your picks. Comment or find me on twitter ("SambaStocks") if you want to request that I post any other results. I'll also post more periodically.
Good Luck,
Samba

Taking a look at Puda Coal

Puda Coal Inc. (Public, AMEX:PUDA) "is a supplier of metallurgical coking coal to the industrial sector in the People’s Republic of China. The Company’s processed coking coal is primarily purchased by coke and steel producers for the purpose of making the coke required for the steel manufacturing process."
Puda Coal is a great play on the Chinese recovery. We know that the industrial sector is very cylical, and steel production is generally a great way to play any recovery. I don't like US steel companies yet because of this latest job number, but the Chinese recover seems to be expidited by aggressive government action.
Let's take a look at Puda Coal's chart:


This is a chart from Yahoo Finance

We see the obvious upward trend of support. At the same time, there is a slight rising wedge, as the resistance gets closer to support, but as it stands, a reversal shouldnt manifest for a couple months at least. The stock is coming off a bounce on the support line. Also, the arrows are where the generally bullish volatility pinches have occured. We can see that after each pinch, there is a significant pop in the stock.
These are classic examples of bullish technicalls.

But of course, we can't look at technicals alone. Puda Coal has positive EPS and a relatively cheap P/E ratio.
What initally interested me in this stock was actually Warren Buffet's buy of Burlington Northern Santa Fe Corporation (Public, NYSE:BNI). Yes, it was a bet on the US long term. However, the consensus seems to be that Buffet is betting on the Chinese recovery with his buy of BNI. I was looking for a recovery stock with lots of room to grow. I'm confident Puda Coal's tiny 110M market cap is going to grow quickly, especially because of its consolidation of eight Chinese coal mines, just over a month ago.



I still like Ford Ford Motor Company (Public, NYSE:F), and Nordstrom, Inc. (Public, NYSE:JWN).
Also, I covered my shorts of CIT Group Inc. (Public, NYSE:CITGQ) on Friday, and I think that's what most investors will be doing in the next few days. If you're looking at a quick profit, take a gander at CITGQ. I would never "recommend" such a terrible company, but it's worth a look.
Good Luck,
Samba