Greg. I have been with this stock for more than a year now. I am happy about the return I'm making so far and expect more by the end of Q1 (early January 1999).
After reading about your prediction, scenario A or B, I started fantasizing about the amount of money we'll be making!!! But then I landed back on earth.
Scenario A is interesting. Don't know about the collapsing part. CGI, since its last acquisition, changed category and is now playing in the big league. New large contracts are surely underway. CGI is under pressure to get large contracts around the world. Investors are expecting it, specifically the institutions.
We have not heard anything from CGI in a while. Then there is the potential acquisition in the U.S.. It's no news that CGI is currently shopping in the U.S. to increase its revenue stream and presence there. Nothing happened since the last major acquisition. So we need to expect the following: Good Q4 results, majors contracts and then news on an acquisition. These events should not favor the collapse of CGI value but increase it!
As far as your scenario B, I find it hard to believe that a stock price of 140$ can be reached in one year (if we exclude CGI' stock history - it is now a new business). To support this price, assuming that the acquisition is finalized by end of Q2-1999, with a PE ratio of 70, we will need an EPS of $2.00.
We will therefore need over $120,000,000 worth of extra net profits coming from new contracts or from the acquired company. That's a lot of money !!!
Time will tell I guess....
See ya! |
