Dueling Fools

Dueling Fools
November 25, 1998

Picking on Pixar
Pixar price (11/24/98): $45 13/16

Today, A Bug's Life opens on theater screens around the country. Since the life span of an insect is relatively brief in most cases, what perfect timing that we should present a Pixar (Nasdaq: PIXR) punchout this week.

Three years after Woody and Buzz captured hearts and parental pocketbooks, the creators of Toy Story are back -- or are they? Rick Munarriz (TMF Edible) thinks the stock is ready to soar. Bill Barker (TMF Max) thinks the stock should be labeled "Not a Flying Toy."

So, let the lights dim and dig into your neighbor's popcorn, as we present our computer-rendered feature Duel presentation.

And don't miss this week's Duel Flashback, where we see if the buy or the sell order was the best call on Charles Schwab (NYSE: SCH).

You Get to Vote!

Once you've read the arguments and the rebuttals, it's your time to cast your vote. We'll tabulate results each week and revisit them from time to time to see whether you were right! As always, we invite you to join us in the Dueling Fools Message board to continue the duel.

[Any suggestions, comments, praise, or flames, please send them along to the Dueling Fools Team.]

The Bull...
Purity pays. Here we have tiny Pixar teaming up with $60 billion market cap Disney (NYSE: DIS) to put out quality animated films. Think about it. Here is a company ultimately splitting profits 50-50 with the leader of family entertainment selling for less than three cents on the Disney dollar.
The Bear...
Echoing Toy Story's Buzz Lightyear, "To infinity and beyond!" is the usual battle cry of Pixar bulls and, indeed, the price of PIXR has a history of going way, way beyond any rational valuation whenever the company releases a movie. In anticipation of a mega-hit from today's release of A Bug's Life, speculators have pushed PIXR shares to ten times book value, about 75 times next year's expected earnings, over 200 times twelve month trailing earnings, and a market cap of about $2.5 billion.

Results for last week's Costco Duel

Answer Percentage
I can't make up my mind


TMF Puck's Bull argument


TMF Edible's Bear argument


They were both excellent


They were both lame