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Strategies & Market Trends : Value Investing

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To: MCsweet who wrote (58491)	11/15/2016 6:04:50 PM
From: Graham Osborn	Read Replies (1) of 78750

Well, I value a business based on the cash they have on hand and how much I think they can generate (and not fritter away) in the future. Of current assets of 1.4B, only about 200M is inventories. Not bad for a company with a MC of 2B and no debt/ minimal leases. Then there's the question of whether the business is worth anything. My sense is even with zero growth 7x EBITDA is pretty conservative. Again, if it truly is a fad product that might be a fair value (GRPO and KING come to mind). All hardware companies ultimately kick the can, but some (like AAPL) do OK in the meantime. It's hard for me to assess what period or methodology your experience with P/ B in tech stocks is drawn from. In the late 90s I wouldn't be surprised if tech stocks had book like biotech does today (i.e. lots of intangibles and goodwill).

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