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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Daniel Chisholm who wrote (8866)	11/3/1999 11:11:00 AM
From: cfimx	Respond to of 78615

Daniel, One way to value your target would be to find "comprables," say five or six that have similar characteristics. Dover would be one example, and maybe grainger and GPC, there are many. See what the market is telling you. Compare that to what your target is selling at. It may be in line but it also might not be. Then start asking yourself why. Perhaps there is a reason ( check the footnotes, etc.) Also, ask yourself, given the present level of interest rates, why the comprables are trading where they are, and does THAT seem correct. Getting the annual reports of comprables is also suggested. But I think this exercise will give you a feel for valuations. Paying attention to transactions, especially CASH, transactions, will help too.

To: Daniel Chisholm who wrote (8866)	11/3/1999 11:22:00 AM
From: James Clarke	Respond to of 78615

I would value the company you describe at about 2.8 times book value. It would show up in my screen at 2.1 times book. I also have ended many an arguement about price earnings/ growth ratios by asking what a bond is worth.

To: Daniel Chisholm who wrote (8866)	11/3/1999 1:02:00 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78615

Daniel: I'd say my screen would show fair value (and highest buy price) slightly under 2x book value. But add for consistent ROE (esp. as it's expected to remain so in future), add a bunch for "no debt" (wow!) add more if they pay a div. and add more if div. yield is higher than S&P div. yield. Etc. for more "if"s. Okay, maybe a top buy price is 3 x book or more depending on the "ifs". Think maybe I'm being influenced a little though because I read Jim's post and his figures. -g- I know of no "traditional mid size industrial company" that fits your parameters. If I could find one as good as you hypothesize, I might just ignore book value and see where the stock is now (and why) vs. where it's been over the past few years. Yes, and looking at comparables would be important since the company seems (to me) to be so outstanding.