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Technology Stocks : The Learning Company (TLC) -- Ignore unavailable to you. Want to Upgrade?

To: Greg R who wrote (5199)	7/26/1998 3:54:00 PM
From: Greg R	Respond to of 6318

Ignorning the hype, a very simple rule of thumb I find works is: The price today should be based upon the expected profit for a year ending five quarters from now. Profit last quarter was $0.30, this quarter $0.34, next quarter? But lets say, 38, 42 and 46, 50, 54 using a linear projection. Take the four quarters leading up to the fifth quarter from now gives $1.92 for a year. The price to be expected is that times a fair Price Earnings ratio. That ratio has been running 32 to 1. However, lets go back to basics. 100/5.8% (current long bond)*5/4 (tax benefit of a potential dividend paying company verses interest). Gives 21. At 21, the price of TLC should be $40.32 US Last week the stock had a PE of 32 giving $61 US There is an argument there is no growth. So let's say a flat $0.30 per month. That gives $25.20 at a PE of 21 and $38.40 at last week's PE of 32. The bottom line to me is the price is at the bottom end of where it will be regardless of what us mere humans think it should be at. Let's face it, the Trading Computers drive the price of these stocks and they are dumb enough to look at just the numbers. INPATHIQUE's charts give a price of $48 to $55 by October. Thanks, but I will go with INPATHIQUE ie the trading computers of the institutional investors any day of the week.