I think this is a question most DGI investors struggle with.
CL is clearly overvalued, but it is also one of the best companies in the world. Basically, the only time you can buy it for fair value is during a significant market downturn. If the company being presented was of lesser quality, I would probably say yes. But CL is such a quality company I'm a lot less sure.
Also, FAST Graphs is great, but according to Chuck Carnevale there are some companies that the market puts a premium on and values differently. For most companies you can use the earnings line (orange line) as "fair value". But other companies, the market values based upon historical PE (blue line). A great example of this is KO. Look at KO's 15 year FAST graph (15 years to ignore the insane valuations in late 90's/early 00's). KO's price hovers around the blue line, not the orange line. I believe CL should be valued the same way in FAST graphs, based upon the historical PE line and not the earnings line. If you do this, then CL is still overvalued, but not nearly as much.
CL is clearly overvalued, but it is also one of the best companies in the world. Basically, the only time you can buy it for fair value is during a significant market downturn. If the company being presented was of lesser quality, I would probably say yes. But CL is such a quality company I'm a lot less sure.
Also, FAST Graphs is great, but according to Chuck Carnevale there are some companies that the market puts a premium on and values differently. For most companies you can use the earnings line (orange line) as "fair value". But other companies, the market values based upon historical PE (blue line). A great example of this is KO. Look at KO's 15 year FAST graph (15 years to ignore the insane valuations in late 90's/early 00's). KO's price hovers around the blue line, not the orange line. I believe CL should be valued the same way in FAST graphs, based upon the historical PE line and not the earnings line. If you do this, then CL is still overvalued, but not nearly as much.