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Strategies & Market Trends : Value Investing

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From: Paul Senior	5/13/2011 1:59:34 AM
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It seems to me the case for investing in these schools is mainly that their business models won't appreciably change with changes in government rules/reimbursements, etc. SRAY has a p/e 12x now and an estimate of 14-15x going forward, whereas in each of the past ten years the average p/e has been above 20x. Company has little net debt and has provided a fairly consistent 20% profit margin. Sometimes stocks fall into a style box (Greenblatt, et. al.), and one can just select such stocks arbitrarily from that population. Get by okay by just buying such companies regardless that their prospects seem unattractive. And/or because the stocks seem beat up enough to discount the problems the companies may be having or could have. I suspect government policies won't put these for-profit ed. companies out of business. So a small bet on one or more might work out. For me, I don't know that all the bad news (rules/reimbursement policies, etc.) is out; the stocks don't seem beat up enough now; and I (that's just me) would rather hold cash or seek values elsewhere.

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