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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated
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To: Mike Buckley who wrote (216)10/31/2003 7:32:21 PM
From: straight life  Read Replies (1) of 2955
 
"...However, if you've seen the RTW fair value as determined by the assumptions in their discounted cash flow analysis, you realize that it also supports the idea that the stock is priced to perfection if not more so.

Does this seem reasonable?

Your assumptions include that the stock price will remain the same even if the company increases free cash flow 50%annually for the next three years. That seems to ignore my comment that if indeed free cash flow continues to increase at that rate, the stock's price will surely rise.

Your chart assumes that Qualcomm will increase FCF 40% annually from FY00 - FY06. Correct me if I'm wrong, but I don't believe very many companies have done that for six years after having achieved $500 million in FCF. If I'm right about that, that expectation is indeed one of perfection. I hope you're estimates are accurate, but I think they assume perfection.

Now that I've answered bunches of your questions, I've only got one for you: What do you think today's fair value is?"


OK... so if the company raises FCF 50% per year you're in... only you don't think they will and it's priced too high so you're out... so, okay, what's fair value? And are you in or out? -confused
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