I have worked all day on my model for my 3 favorite stocks, and I have decided to add to all of them, and forget the market.
I have read all of the posts since yesterday, and there are some great analysises(sp?). I did a very complex model, had a drink, reworked it, had another drink, reworked it, and then decided I either had 2 much to drink, or I was crazy. Both very plausible scenarios.
Opinions on the market are worth what you pay for them, but I think it is getting much tougher, and you have to concentrate on what you know, or think you know, make a big bet, and pray like a son of a bitch.
Here is how I come out on TPRO.A very brief summary of a whole bunch of info from the call.
70,000 sites @$20,000 per=$1.4 billion.
Assume we get only 20%=$280,000,000 x52% gross margins=$145,600,000 pre-tax, assume 38% tax rate=$90,272,000 net income over 2 years.Divide by 24.5mm shares=$3.68 per share. I don't know how you spread it out, and quite frankly I don't care.
I am not paying anything for their basic business, which is growing and will continue to do so.
If I get 15% of $3.68 this year=$.55 aasume 30x p/e =$16.50
Next year I get $3.13x25 p/e, because some people will say business is peaking, but with that growth rate give me a break, I come up with $78 per share.
I think my numbers are way low, but this is my money, so I build best case, worst case, middle case scenario. I think $16.50 is way low for this year, but I also think $78 is way high in the real world, so I now give it a 40% haircut, and come up with $47 next year. I looked at 0% coupon bonds, and said what the hell TPRO looks a little better.
$6 1/2 to $47 in 18 months is a reasonable return, and deserves my full attention. If you heard, or what I think I heard, these guys are sitting on a frigging gold mine, and they have the only picks, axes in town, and they also own the saloon, so how much better does it get?
I have spoken to over 25 money guys since yesterday, and they have listened to my bs for 3 months,and they now say ok you win. What does that mean? I would venture a guess, they might nibble a little bit from time to time.
I have wrestled with this idea for some time, and think I have come to realization we really are right. I honestly believe now you have to quit looking at it every tick,every day, and sit back and give yourself a chance to make some real money. |
