Some investors tend to put too much weight on a stock’s all-time high when fishing for bargains. Only because a stock has been (much) higher in the past, does not automatically mean the current setup is attractive or even dirt-cheap. Unfortunately, often this reference point – the all-time high – is used as a justification for why a stock must be cheap now. I am raising my finger. It is not enough to just look at the former high. The entire setup must be attractive, otherwise the risk to grab a value trap is high. All my paid-members will receive my latest stock idea – a barely known, profitable growth company with an excellent market position where the all-time high should be taken out soon.

Summary and key takeaways from today’s Weekly
– Focussing on past glories in the form of the all-time high in the rearview mirror is a very dangerous approach.
– This anchor effect can lead to disastrous returns, if the fundamental situation is not analyzed and understood properly.
– I am discussing five cases of well-known names that fit into this scheme.

When thinking about all-time highs that were never reached again, most likely the first thought might circle around dotcom era highfliers that in the best case never saw their high again and in the worst case do not even exist anymore.

Jumping to the present, despite the market hovering around all-time highs, there are still plenty of stocks that are not. And not just by a smidgen, but decisively off. For me that is trading at least 30%, not seldom even 50% or more below where the anchor was set. In all instances, in a stark contrast to the picture that market indices are showing.

The deciding factor is the fundamental setup.

If a case has a broken story where the thesis does not hold anymore it is unlikely that a stock will return to its former glory. On the other hand, if there was a peak due to exuberance and elevated expectations, but at the same time the underlying business has even improved, it should be only a matter of time until new highs materialize.

I am discussing five prominent cases in this Weekly, where I believe the all-time highs won’t be seen for a long time, if at all.

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^{both as per 11 June 2025 market close – since August 2022}

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Focus on fundamentals, not the old all-time high

As in many cases, the idea to write this Weekly came to me through Twitter.

I often stumble upon tweets where a stock that has fallen so and so much in price is being discussed. Usually, it is a bigger company with a prominent name so that many retail investors quickly come to the same conclusion that it must be a bargain – because the stock was previously up, but now it is down.

This “analysis” works only if a company only goes through a temporary correction, for whatever reason (valuation, market correction, a single bad quarter, cautious outlook, etc.). If something inside is broken or even entirely rotten, bigger drops, especially against an overall healthy market and of a signifiant size in comparatively short time, occur for a reason or two.

And not because Mr. Market is missing something.

In this regard, the anchor effect comes into play. The anchor effect is when people rely too much on the first piece of information they hear, like a stock’s past high, to make decisions. It can trick their brain into thinking that number is set in stone or more important than it really is, leading to bad choices. This approach can lead them to overlook longer-term underlying trends or data, causing poor judgments.

Not seldom the end result is a value trap.

On the other side, to not grab a value trap but a future winner, the underlying business must be healthy. And there needs to be some kind of catalyst like an improved business outlook, a pending market approval for a drug, higher commodity prices, shortages in supply, becoming a profitable company, a big debt repayment, the announcement of a dividend or buyback, etc.

If this is not given and the company is losing market share or even relevance, has high and rising debt, expiring patents without an adequate replenishment, an uncertain future and shows no signs of improvements, it is difficult to make an argument for a reversal.

I want to discuss five cases of prominent names today.

All have seen their all-time highs a while ago and all have some kind of internal struggles. While I do not rule out entirely that new highs will be made (inflation, speculative drive), I do not see great setups for investments, because the cases are too sick for me.

Starting with Boeing (ISIN: US0970231058, Ticker: BA).

Boeing was a high-flyer until it hit the ground for several reasons. First came the lockdowns which necessitated a big capital restructuring. New equity was raised near the lows and plenty of debt was taken on the balance sheet. One could argue that this was an external event beyond the company’s control – I do not want to oppose that view.

You can see on the chart how the stock went up 4x in a relatively short period of time starting around 2016–2017, only to crater again.

Since then, it is moving sideways in a broader range give or take 50% below its ATH.

However, Boeing also made headlines through their quality issues for which they are clearly to blame. Also, management was aggressively paying dividends (black) and buying back stock (green) on the way up.

At the same time, net debt (blue) climbed noticeably from what was prior a net cash position. The following shows the development between 2015 and 2019, i.e. before the big external shock.

Boeing grounded hard and destroyed its balance sheet. Not to mention that share count has gone up by 20% since the buybacks stopped. In total, Boeing spent ~36 bn. USD on buybacks – to achieve an almost unchanged share count over the last decade. The buybacks happened at higher stock prices while the equity was raised much lower.

The formula to destroy shareholder value.

But there’s another thing, somewhat ironic. The valuation now is very expensive, despite the lower looking stock price.

Let’s look at the market cap (blue) and enterprise value (black).

While the market cap is still 50–60 bn. USD below the highs of 2018–2019, the enterprise value is almost there. At least on the lower end, signaling this is by no means a massively discounted bargain.

At the same time, the chart below shows sales (blue) are considerably lower still by about a third and Boeing continues to post operating losses (black) and burning cash (not shown).

While I understand that this is a turnaround still in the making – though with a questionable outcome – what I do not understand is why the valuation is so high.

Price to sales is where it was at the high and enterprise value is now even already higher than in 2018–2019 – the time before the company crashed. And when back then the valuation was considerably above historical average.

Boeing has an order backlog of more than 500 bn. USD or currently 7x sales.

But backlog can be cancelled and it is nothing that will be worked through in a year or two. Also assuming a margin of 10% (Boeing only in two years over the last decade had more than 10% operating margins!), the resulting 50 bn. USD is still less than the current market cap. Without factoring in the still big debt load of ~30 bn. USD, high interest payments and not discounting that figure for returns to present value.

In other words, Boeing is already valued with a considerable multiple.

For me, this is not undervalued and I lack the phantasy to see the stock returning back to its highs for the time being.

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Next candidate, good old Intel (ISIN: US4581401001, Ticker. INTC).

The once seemingly almighty chip maker is in a disastrous condition. Looking at the long-term price chart is already telling.

While being already five years in the past, the shift of Apple (ISIN: US0378331005, Ticker: AAPL) from Intel to own silicon (chips) was as it looks like the nail in the coffin for Intel. Apple made this break-through announcement already on their 2020 WWDC, but it took som time before the effects rippled through Intel.

The once undisputed industry leader suddenly faced the new bitter reality.

It has lost its technological leadership with many delays and disappointments on the road. Apple as a key customer gone and behind the curtain other tech giants also designing their own chipsets. A huge blow. And then the desperate-looking transition attempt to suddenly run a foundry business.

Glancing over the key financial figures gives us a first impression about the current state, starting with the sales and gross profit development.

I used gross profit on purpose as everything below looks truly ugly. Let’s do it nonetheless, gross profit margin and the ones for operating profit and free cash flow.

All the while the capital-intensive build-out of new foundry plants required the company begging for money and tax rabates huge financial means.

Consequently, the once clean balance sheet turned into a nightmare.

Burning cash with no clear plans for profitability and at the same time a worsening economic environment, does not look like a walk in the park for Intel. As a reminder, semiconductors are among the most cyclical sectors. In 2009, even then industry leader Intel posted losses.

I have no clue how they want to turn this sinking ship around. Intel has a new CEO, fine. But he needs to deliver. You can see below that the market cap (black) is almost where it was at the bottom of the 2009 fallout. You can also see that most of the time the black line was above the blue line – when the company had net cash on the balance sheet.

Due to the lack of profitably, I do not even know how to value this one properly. We could use price to book or sales ratios, but does it make sense when we don’t know whether Intel will be ever profitable again? While they keep talking about “Driving Greater Execution and Efficiency” in their latest earnings release, the guidance foresees losses to continue.

I honestly think that when the situation will be dire enough and the stock lower, that someone will come to the rescue and buy them out of the misery. Intel is too important to be allowed to go belly up.

But it remains a very risky and politically-driven play (tariffs, on-shoring, etc.).

Number three on my list, Jack Daniel’s company Brown-Forman (ISIN: ISIN: US1156372096, Ticker: BF.B) which I had already featured a year ago in June 2024 (see here).

The stock has had an impressive very-long-term run. But it is hard not to notice the fall from grace.

When I published my analysis, Brown-Forman’s stock had already almost halved.

A nightmare for buy-the-dippers who saw only discounts. While there were indeed discounts in many supermarkets, the stock remained prohibitively expensive.

I am by no means surprised that another third was shed.

The latest crash came after the company reported earnings last week.

Not only were the backward-looking numbers weak. Also and especially the guidance was a shock. What was once promised to be a perpetual growth story of prospering middle-classes and emerging markets who also want to rise up to the standards of living of older generations, the truth seems to be more that the sector is inherently sick and got tipsy from its former success.

People are simply drinking less and on top we have a cost of living crisis.

It is not wonder these companies (Pernod Ricard is another such case, see here) have lost pricing power. Volumes cannot be held up and paired with decent to high debt loads and still not-cheap valuations, there’s no reason to pop the bottle.

Over the last decade, sales are up modestly, but operating income is basically flat.

Adjusted for inflation, this is not a win. FCF has been weak for the last three years.

A free cash flow of give or take 400 mn. USD and no growth, but plenty of challenges, usually would warrant a multiple of at best 10x. In other words, the level of tobacco stocks.

Until 4 bn. USD are reached on an enterprise value level, there’s still plenty of downside.

At least in theory. I do not expect the current numbers to remain static. The company and also its peers will try to raise prices a bit to push numbers up. But it’s amazing how this one could trade at almost 50x free cash flow not too long ago (40 bn. EV / 800 mn. USD FCF).

And people were calling this cornerstones of a portfolio due to their strong brands.

The next likely step will be that the dividends in the sector will be questioned and also cut. While I am seeing a higher necessity in the case of Pernod Ricard (ISIN: FR0000120693, Ticker: RI) as they’re already paying out more than they generate in FCF, Brown-Forman likely will enter the race soon, too.

They are a proud dividend aristocrat with 41 consecutive hikes (see here).

But we’re approaching a setup where it will be tough if the current challenges which I believe are structural continue to persist.

Swoosh, coming to number four which is Nike (ISIN: US6541061031, Ticker: NKE).

Nike was seen as a safe forever-compounder where nothing could go wrong. The majority will likely instantly know that the stock is down from its highs. But honestly, did you know that it is down almost two-thirds?

At a time where market indices continued to rise?

One thing is the exuberant valuation at the time of the peak.

Nike had a free cash flow of 6 bn. USD against an enterprise value of 280 bn. USD – an almost 50x multiple which was just insane.

Multiple compression is one thing. But there’s more to it why I believe we won’t see the all-time high for the time being, if at all in the near- to mid-term.

The industry leader is likely in better shape than the until here mentioned companies. But even Nike has been coping with some challenges. It has been losing market share in its core footwear segment to names like Skechers (ISIN: US8305661055, Ticker: SKX, soon to be acquired by private equity) and ON (ISIN: CH1134540470, Ticker: ONON).

It is only an approximation, as all these companies are also selling other stuff, not just shoes. But it’s sufficient for a big picture overview.

Here are the sales growth rates over the last five years until 31 May 2024 – when Nike’s last fiscal year closed. It hasn’t gotten any better since then.

It’s evident who’s been the laggard.

Nike has been suffering from lower margins and sales growth has been anemic. The weak consumer sentiment plays a key role here, too. But Nike also seems to have internal issues.

The balance sheet is fine, I have no problems with that.

But the valuation is still stretched. 92 bn. USD market cap and 93 bn. USD EV vs. a FCF of c. 5 bn. USD for an EV / FCF multiple of 18–19x. While considerably lower than in the past and definitely more moderte, this is unlikely rock-bottom should a recession hit. And there’s still decent growth expectations priced into the stock, making it an unattractive setup.

Obviously the all-time high is out of reach for a good reason.

And my final example for today, a company that I had discussed in the past either (see here), is Harley-Davidson (ISIN: US4128221086, Ticker: HOG).

The iconic motorcycle company has its best days behind them as the stock price suggests.

HOG trades today where it was around 2000 which is hardly something to be applauded for. It is even more remarkable as the company is very aggressively buying back its own stock.

Over the last decade, share count shrank by about a third and buybacks are ongoing with high torque thanks to the low share price.

As I had written in my separate analysis, Harley-Davidson has been losing customers or riders as they call them en masse. Not since yesterday, but indeed over the last decade. While the motorcycle market itself has been growing, Harley lost touch with its customers and has seen its market share fall piece by piece. In Europe, the brand has become almost irrelevant.

As an interesting effect, a lower share count and a lower share price lead to a quickly evaporating market cap.

This chart looks entirely different compared to the stock price graphic. In fact, the company has been falling apart since the dawn of the Great Financial Crisis and never fully recovered.

The currently challenging consumer environment has left its footprint on the business with sales and margins falling.

Of course falling sales and margins in such an environment could for sure be just of cyclical nature. But the declining market share and less and less registered Harley’s every year speak a different language.

For now, the balance sheet is clean and the company is still profitable. Below, we can see that cash (green) exceed the sum of the other two bars which are short- and long-term debt. That’s definitive a plus.

But not even the aggressive buybacks were able to keep the stock up.

The company seems to be in perpetual decline and until there are no signs of a rejuvenation and rising market share as well as sold and registered units, for now I see no reason to be engaged here.

There’s a saying among deep value hunters that at the right price every stock can be attractive. For me that would require a massive bargain, pricing the company as if it were going out of business tomorrow or even in the evening today while at the same time the financial situation (balance sheet, profitability, cash flow) is clean.

Harley-Davidson seem to be only fairly valued – despite the big decline of its stock.

Trading at 1x tangible book value, I do not see any discount.

I am inclined to say that in the past HOG was trading with a massive (unjustified) premium. Tangible book value is a great metric for such an old-economy business as we have predominantly hard assets to value like manufacturing sites, cash and receivables and credits / leasing positions from the financing arm.

That’s why I am only watching the stock from the sidelines.

Due to its still iconic brand – despite the decline in popularity and DEI issues in the past – my guess is that at a certain point someone will be interested to buy the company.

Should we see a recession, I can imagine this stock to lose another quarter or even more. Depending on the general condition of both, the company and the economy, it might be worth a look. But not now.

With this lucrative setup and only a modest valuation, it should only be a question of time until this stock pierces through its old all-time high.

The fundamentals are set, the trend is in motion.

Don’t miss this opportunity!

Conclusion

Focussing on past glories in the form of the all-time high in the rearview mirror is a very dangerous approach.

This anchor effect can lead to disastrous returns, if the fundamental situation is not analyzed and understood properly.

I am discussing five cases of well-known names that fit into this scheme.

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