Hi James, re: CMH
17% return on equity for something like 10 years in a row with a conservative balance sheet
It doesn't get much better than this at 11 times earnings.
No, there is no catalyst
I still cannot understand why this stock does not trade at 25 times earnings.
Would I be naive in responding, "who cares?" Not that I don't think it doesn't sound like a good investment idea but rather, who cares if a catalyst never appears, and who cares if the stock never grows its multiple?
If this enterprise is honestly earning 17% ROE, and you can buy it for (according to Yahoo! -- uh-oh ;-) 1.8X book value, isn't this a "sort-o-Buffett" kind of stock?
Provided that they continue to earn good ROE like this, selling out at 11X earnings 10-15 years from now looks pretty attractive from where I stand. Of course if all of this is true, not selling it 10-15 years from now would probably be even more attractive ;-)
- Daniel
(just looking at their long term stock price, from 88 to today, the stock price seems to have grown from about $1.8 (as near as I can eyeball Yahoo!'s logarithmic chart ;-), to $11-5/16 today. This growth of 6.28X over 11 years works out to 18% per annum. So perhaps the apparent 17% ROE is worth looking into......) |
