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Technology Stocks : TLAB info?

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To: llwk7051@aol.com who wrote (5441)4/24/1999 1:53:00 PM
From: Chuzzlewit  Read Replies (2) of 7342
 
Robert, this discussion brings up one other very interesting point. Let's forget about valuation and focus on the issue of growth. Assuming that you buy a company like TLA and it can grow earnings consistently for a long period of time (let's say 5 years for example) at a growth rate of say 30%. So five years from now it should be worth 3.7129 of what it is worth today. If today's price is properly set that yields an annualized growth of 30%. But what if the price today is too high? Let's say for the sake of argument it is 10% too high, so that the return after 5 years would be 3.3754. If you calculate that back the rate of appreciation falls to 27.55%.

And that pretty much underscore the problem with Jubak's thinking: it is entirely too short-sighted. Birck has pretty much guaranteed 34% for the next 4 years.

TTFN,
CTC
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