What would you pay for this stock?
http://www.gurufocus.com/news/177048/blind-stock-valuation-2-what-would-you-pay-for-this-stock
The Art of Asking Questions
http://artofmanliness.com/2012/05/15/how-to-ask-questions/
Free market healthcare
http://www.lewrockwell.com/lewrockwell-show/2012/05/08/276-free-market-medical-care/
JP Morgan and Bank Controls
http://www.mises.org/daily/6056/JPMorgan-Chase-and-Central-Banking
I don’t have a gurufocus account and neither do I want to create one.
Blind Pick Stock; My intrinsic value for this stock is at $30.
Inventory growth rate is lower than EBIT growth rate. (A good sign!) More payable than receivables show that its getting an industry loan (Another good sign! Use up free money and pay people back with inflated money). 24% after-tax ROITC is really good so its business should be a ‘franchise’ or at minimum an decent business that can generate lots of money on little capital.
Business 44% CAGR EBIT growth rate, I estimate a 6% perpetual growth rate (3-4% REAL). 13% cost of capital; its not a huge company. There may still be risks with a mid-sized company. ($105 million EBIT)
All comments welcomed !
I posted my thoughts in the GuruFocus thread and came up with an intrinsic value range of approximately $6-13/share.
Few things that I looked at:
1. Implied average life of PP&E peaked at 17 years and is now down to 7 years. What’s going on to cause such a big change?
2. How are they maintaining gross margins that are this steady?
3. Accrued Expenses as a percentage of revenue have increased 50% from a low of 1.7% of revenue to 2.8% of revenue most recently. What’s causing that?
Overall, I approached this with some skepticism and am not assuming such drastic growth into the future. Maintaining 30% growth, and so consistently is really tough for any business executive – he must have a beyond amazing team.