Ann-
I have been a CUC shareholder since the beginning of 1996. I have a small loss, and I have never had much of a profit in the investment. And yet, I am considering adding to my position. CUC's stock has suffered for various reasons, IMO.
First, numerous acquisitions, the largest of which were DAVD & SIER last summer, have introduced doubts about CUC's business and earnings outlook.
Second, CUC's apparent business shift towards the online retail and software markets seems to be spooking the "Street."
Third, the non-recurring charges from acquisitions and such have sharply reduced CUC's actual EPS, giving the illusion of a very high P/E.
Admittedly, when I bought CUC last year, the stock was slightly overpriced. But now the stock trades at about 24x CY1997 EPS, compared to a projected growth of 25-29% (I think it will be 30+%). That's a pretty good discount. I'm waiting for it to drop a bit more.
Only time will tell, but I believe that the stock will provide returns of about 30% annually for the next several years.
Todd |
