A Little Grace & Abbott Labs (ABT)

From the time-honored vault: Originally published on 12/14/2010, this entry into that year’s Christmas Countdown carried a powerful reminder about the sometimes silent power of long-term investing.
The second company in our 12-day Christmas Countdown is Abbott Labs (ABT).  Abbott Labs has been featured prominently at Manifest Investing in our Sweet 16 screening results for the December newsletter and ABT has been selected twice for the MANIFEST Round Table (more on this to follow) and we regard the company as a core, or bolstering, holding with consistent steady results over the years … Speaking of “over the years,” I don’t know about you, but I get a little reflective and nostalgic as December marches on and the new year approaches.  In this case, our selection of Abbott Labs gives us an opportunity to revisit a story shared by Sharon Serres back in March with the MANIFEST community.  It’s the story of Grace Groner — one of those legendary literary little old ladies.  Grace worked for Abbott Labs and had done so for decades, holding a few shares that she’d purchased decades ago.  I don’t know what other stocks may have resided in her portfolio, but when Grace passed away earlier this year, she left behind an awesome gift for her alma mater, Lake Forest College.

It’s seems fitting to me to celebrate a little grace (in this case, a LOT of grace) during the holiday season.

Abbott Labs (ABT)

No stranger to investors in our community, Abbott Labs (ABT) is a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health. Products span the continuum of care, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies. The comprehensive line of products encircles life itself – addressing important health needs from infancy to the golden years.  ABT is recognized as a global enterprise with the ability to serve customers around the world.

Throughout its 120+ year history, Abbott people have been driven by a constant goal: to advance medical science to help people live healthier lives. It’s part of their heritage.  Today, approximately 90,000 employees around the world share the passion for “Turning Science Into Caring.” It’s a commitment to focusing on what matters most: life and the potential it holds when we are feeling our best.

Stock Study and Equity Analysis Guide

Q: Why do we do stock studies?

A: To build a vision of what a company (stock) might be worth in the future.

That vision includes two core components: a five-year earnings forecast … and an estimate of the average value (projected P/E ratio) that we believe investors will be willing to pay — based on our assumptions, judgments and careful considerations.

Any stock study is basically a fill-in-the-blanks quiz.  If (company name) can grow sales at ____%, achieve a profitability of ___% for net margin, and if a reasonable price-to-earnings ratio (P/E, essentially the foundation of the value of any company) would be _____x … then the projected annual return (PAR) could reasonably be:  _______%.

In the case of ABT, our answers are (1) 9% … (2) 18% … and (3) 15x … for a result of 17-18% projected returns.

As I mentioned before, we’ve featured Abbott Labs frequently over the last several months.  Recently, I covered it as I discussed some screening results and shared the study results behind the answers selected for the quiz above.  You can view a video (including powerpoint discussion with audio) here:

http://www.youtube.com/watch?v=BU3ECwHXMww

Our next Round Table session is scheduled for [12/29/2012 at 11 AM ET] … with more details and information here:

http://www.manifestinvesting.com/events/103-round-table-december-29-2012

We look forward to discovering a little more grace and formidable long-term investments like Abbott Labs during our Round Table session.

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