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

To: Paul Senior who wrote (40827)	12/27/2010 4:48:34 PM
From: armi	Read Replies (2) \| Respond to of 78751

Depends on the company and what they have been accomplishing in the past. For example, JNJ has been growing at 12% Owner's Earnings for the last 9 years. I'm using 8% growth rate(Buffett's definition with college edu), 4.25%(definition without college edu), discounted at 20%. Now I just got to slap on a multiple. I'm using 11. JNJ averages at 11 times FCF. Owner's Earnings are pretty close to FCF. It equates into approximately $85 a share. I figured if I buy it today, the only thing that is guaranteed is the 30 year T-Bond hence the 4.25%. 8% is just a conservative number I came up with over the top of my head. I figured since I was going to hold my investment for "perpetuity" I might as well us 30 years as the benchmark cause its the longest bond there is.