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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: John Stichnoth who wrote (23871)	4/29/2000 12:47:00 PM
From: bozwood	Read Replies (1) \| Respond to of 54805

John, I assume you mean a terminal growth rate equal to roughly 11% (the market's L-T average return). My feeling is that that is a high estimate and really has a large impact on the current value using DFCF. I feel the terminal growth rate should be closer to what a steady GDP growth rate should be or maybe a little higher. Also, with a company growing a fast as CREE, it might be beneficial to take the valuation out further than 7 years in order to obtain a steady state. This may give a more accurate picture on value. Just my opinions, but please correct me if I sound wrong. Thanks >4. Pirah, a wrinkle on your approach. I have tended to estimate a future growth rate, and estimated how far out I can carry that rate. After that I assume growth suddenly reverts to the market. For instance, I feel confident that Cisco will grow at 30%+ p.a., for 7 years. After that growth is the market's. That way, I can assume that the company's future P/E--or P/FCF--should match the market's at some point. It's a bit of a shortcut that seems not to lose too much in the process.

To: John Stichnoth who wrote (23871)	4/30/2000 11:20:00 AM
From: Mike Buckley	Respond to of 54805

John, Lately, I've been finding interesting business models and situations, and then investigating the numbers. John, that's the way I've always approached investments. If I don't like the business model and the industry opportunities, I don't care how good the numbers are. I think Gorilla Gaming stresses the same approach by asking that we look at proprietary, open architectures in mass markets first, then looking to see where the product is in the adoption life cycle, then the other details last. -Mike Buckley