How do you get a forward pe of 500 in five years? Do you assume AOL will stand still over that time? To get to $1000 in five years with the current business model, and its current trailing p/e, AOL would only have to grow its US paying membership from 17M to, say, 50M, and add, say, 120M overseas users. If its e-commerce revs grew twice as fast, they could do the same with 25M US and 60M overseas, or 50M US and 25M overseas. I not only think this is doable, it is conservative. And this is assuming they keep their current monthly rates with no increase. With broadband will come higher rates.
If I did not think this was a potential 10 bagger in five years, I would not hold it. There are plenty of other growth companies out there that have that kind of potential, such as ATHM, QWST, QCOM, PCS and others (which I also hold).
I place AOL and these others into my high growth medium-to-high risk portion of my portfolio. I hold a mix of health care and balanced funds for the rest.
It's crazy to be in a stock with this kind of volatility and not expect hypergrowth, don't you think? |
