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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Uncle Frank who wrote (48523)	11/3/2001 12:55:52 AM
From: chaz	Read Replies (1) of 54805

uf-- Nice remarks on the NTAP thread about Jacob Snyder. I'm mentioning it here because what he does there seems like such a good, practical approach, that we could put it to use here with a bunch of other companies. Here's a snippet from one of his recent posts that I thought to be of very practical value. Let's assume the most optimistic possible scenario: in calendar year 2002, NTAPs earnings rebound to where they were in 2000. That would be $0.30. Let's assume profits grow 40% after that, and NTAP gets a PE equal to the growth rate. Then: $0.30 X 1.40 = $0.42 EPS in 2003, and $0.42 X PE of 40 = stock price of 17. I don't see how even the wildest Bull can justify paying a price higher than that, today. The fact that we were close to that price, at yesterday's peak, given current macro and industry conditions, indicates there is a lot of hopes and dreams in the stock price, even now. Chaz

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