Hi there Spekulatius ... so you believe HANS is "grossly overpriced".
Well, if your definition is related to a stock's P/E, which, in my opinion, is an important indicator of this aspect, let's apply some mathematical analysis...
Below is a table of HANS's EPS (trailing 12 mth), Price, P/E and percentage increase of its EPS since its previous Quarterly Results :-
DATE......EPS....PRICE....P/E....% INCREASE IN EPS
13/5/05....251c...6230.......25..........31%
14/3/05....191c...5370.......28..........41%
22/11/04..135c...3100.......23..........34%
27/8/04....101c...2121.......21
So we see that HANS's stock price increased by some 194% with its P/E in the region of 21 to 28. When its stock price was about 6200 just before its results were announced on the 13/5/05, its P/E would have been 6200/191 = 33, based on its last 12 month trailing EPS.
From what I think you are saying, HANS would have then been regarded by yourself as "grossly overpriced", because its current P/E is 8536/251 = 34.
Similarly, on the 14/3/04 HANS's P/E would have been
5370/135 = 39. Yet these "grossly overpriced" periods didn't appear to stop HANS's stock price from continuing to rise from 2121 to its current 8536, which is over 300% !!
What I recommend one does is to look for an "average" percentage increase in EPS and apply it to a stock's previous 12 month EPS and project it forward. This can be effective if there's been a fairly consistent increase over time. From the above table, the average percentage increase is (34+41+31)/3 = 35%. If we now increase HANS's latest EPS by 35% we get
251c x 1.35 = 339c as its "predicted" EPS. Dividing this into its current price we get a future P/E = 8536/339 = 25.
So we are now back to what HANS has generally been showing, while still providing a steady increase in stock price.
Since 15/5/03 HANS has never failed to show an increase in its EPS.
So maybe it's not so "grossly overpriced" after all.
I take your point about OXY. However, in my opinion, I don't think it's a case so much of "cyclical", but rather one of a resource stock's vulnerability to the price of its resource. In this case, the oil price. This is why I personally prefer to tread warily with regard to resource stocks, be they oil based or mineral based. They may be very well run companies in their own right, but they are generally powerless to influence the falling price of their resource, which can result in a depleted stock price.
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