To all:
The concept of relative value must come into play with this issue sooner or later. If the company were to make say $.75 from now to the end of capitalism--with no growth at all--then at the current quotation it would only take about ten years for a new investor to recover his entire purchase price via company earnings. Compare that to the many issues which would take an investment twenty, thirty years, or even longer to recover his invetsment via earnings--even after factoring in a realistic rate of earnings. At these levels, I believe that ECGOF is a takeover waiting to happen. An acquiring company would actually have access to the earnings, whereas shareholders do not with most issues todays.
Many people will pay significantly more for a stock than what ECGOF is presently selling at, for a company that ssay, lost $.50 last year, but is only expected to lose $.25 this year, reasoning that such portends a one hundred percent growth rate. However, there is no certainity, from either a micro company perspective, or a macro market or economic perspective, that five years down the road this rapid rate of "growth" will be substainable (geez, how many of us can attest to learning that bitter lesson the hard way?!). ECGOF has a strong history of earnings; and has succh here and now. For a passive investment, a recovery period of ten years is remarkably short in any market environment, but particularly in this curren one. Think about it for a moment. If you were twenty years old, and you could invest in a company that would--after ten years--return to you a pure annual profit of seventy-five cents a share--FOR THE REST OF YOUR LIFE--wouldn't you jump at the opportunity?
The future is uncertain for most companies. ECGOF is a substantial company, currentlt in a stage of aggressive acquisition. Eventually, management will elect a period of consolidation in which it will concentrate on maximizing earnings from operations, and paying off debt. Then, I believe that eps will reflect the fruits of the company's current strategy. As I said, the future is uncertain for most companies. However, taking the view that ECGOF will be able to substain at least its current level of eps is far less unreasoanble than assuming that a small tech company, currently losing one hundred percent less than it did last year, will be able to substain this "growth rate" far into the uncharted waters of future market and economic conditions. And assuming that ECGOF will continue to turn a profit for an indefinite period, seems more reasonable than assuming a small, high tech company will even be around fifteen years from now.
It's easy for investors to lose perspective at times like these. This is when preditory companies pounce.
best regards |
