Tata Motors Buys Jaguar, Land Rover From Ford

And at last Tata Motors acquired Jaguar and Land Rover for $1.7 Billion. Ford bought the Jaguar brand in 1989 for $2.5 Billion and acquired Land Rover for $2.7 Billion (Tata will pay $2.3 Billion but Ford will pay back about $600 Million when the deal closes). So the Tatas paid only one third of the price which Ford paid for.

But what they are going to do with these two luxury brands? Of course it expands the global reach of Tata Motors. Ford was struggling with those brands and they want to focus on its own brands.

First, list all stocks with Price/Earnings ratios below 9. Note: Graham was writing in 1970 when P/E’s as a whole were not as elevated by technology stocks as they are today. Readers who are less risk-averse or who just want to consider a wider range of stocks may wish to vary the P/E in order to see what comes up — perhaps up to 80 percent of the average P/E of the S&P 500 would be a good start. Currently the operating average is around 18 and 85 percent of that figure is just over 15. Graham did not state if he was using a Trailing or Forward P/E ratio, but most likely he was using Trailing P/Es. I personally prefer to use Forward P/E ratios, especially if they are significantly lower than the Trailing P/E as this implies expected earnings growth and therefore possible increase in the stock price.

Once we have a list of stocks meeting the P/E criterion, we consider the financial condition of each stock, referring to the most recent balance sheet: Initially, Current Assets must be at least 1.5 times Current Liabilities. This can also be gleaned via a stock screener by displaying stocks with “Current Ratio” >= 1.5. Total Debt must not be greater than 110% of Net Current Assets (i.e. the sum of Cash & Cash Equivalents, Inventory, Accounts Receivable). Looking further back, we need to find evidence of Earnings Stability, with no deficit in the last five years, i.e. no evidence of an annual loss. Additionally, evidence of earnings growth over a five-year period is a must. This can simply be the consideration, for example, that 2004 earnings were greater than 2000 earnings.

There should be some current dividend payout. Finally, the current price of the stock should be less than 120% of the NCAV per share or Graham’s Number. Where to find this number? From the balance sheet, subtract Total Liabilities from Current Assets, and divide the result by the number of shares outstanding. Assuming you have a positive number that is greater than zero, the stock’s price should not be greater than 120% of this number.

Source: Value Investing Portal

1. Guide To Investing In Stock Market (Part I)
2. Guide To Investing In Stock Market (Part II)
3. Introducing The Indian Indices- BSE Sensex and the S&P CNX Nifty
4. Market Timing Or Time In The Market
5. Importance of Asset Allocation
6. Lessons To Be Learnt From The Recent Correction
7. Investors should have a Long-Term Horizon
8. Valuation And Valuation Techniques
9. Enter The Stock Market When No One Dares
10. How To Survive In A Bear Market - A Warren Buffett Style

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What is an FMP?

FMP stand for Fixed Maturity Plan. These are essentially close-ended income schemes with a fixed maturity date i.e. that run for a fixed period of time. This period could range from 1 month to as long as two years or more. Just like an income scheme, FMPs invest in fixed income instruments i.e. bonds, government securities, money market instruments etc. The tenure of these instruments depends on the tenure of the scheme.

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Bear markets can be a temporary phenomenon or a permanent one. In a temporary bear market you could lose 30% or more but they are likely to recover in the near term itself. But in a permanent bear market you could lose 30% or more and that never recovers for a longer period time.

Remember the Wall Street Crash of 1929? Dow Jones corrected almost 90% from its peak. And it didn’t recover those loses until 1954. So it took almost 25 years for the Dow Jones to hit a new high.

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Rinspeed sQuba is one of the most exciting car of the year. sQuba, developed by Swiss company Rinspeed, is the world’s first car that can be driven both on land and under water.