Mark, just in case you, and perhaps others, don't understand what Mitchell is implying in Post #881, I will elaborate.
>If you buy shares today, it will take you 9 years merely to break
>even, assuming that 32% growth continues indefinitely.
You are very, very wrong in your analysis. The value of a fast-growing software company is rarely, if ever, equal to Book Value - which you estimate will only reach $20.49 per share in 2005. Even this crashing market knows better than that. By your logic, MSFT would be worth about $5/share, rather than the current market value around $110.
If you really believe WIND will grow earnings 32% over the next nine years, reaching $5.21 earnings, then you should sell everything you own and borrow as much as you possibly can and buy WIND now. Forget Book Value, any company that increases earnings consistently at 32% per annum will carry a multiple market price to earnings of at least 40 or 50. At 40, your investment would grow from $20/share today to $208/share in nine years. That is a ten-bagger! The bond market will not even double your money in 10 years - and that's ignoring taxes.
Actually, WIND will do much better than you project, particularly over the next three to five years, and will deserve and get a higher PE ratio than 40, yielding more than a ten-bagger. Why is the market letting WIND sell so cheap? Because it is crashing!
Allen |
