$1.30 target, page-41

Accounting for growth is the whole reason why high growth stocks trade ahead of themselves. Its also a reason as to why some stocks trade well down based on current earnings. If investors don't believe growth can be sustained then companies will usually fall to very low PE levels. If I didn't believe in growth materializing then I would sell A2M wouldn't I? I guess the whole investment community would and we would trade down A2M to 50 cents which is your standard PE of 15 for slow growth. That's why I posted that forecasted PE is mainly used with high growth stocks and its the key reasoning behind A2M's high PE.

'What the PE means
A PE ratio is simply the proxy for how most investments are valued: the present value of the future earnings streams that are available to investors. Note that it is future and not past earnings streams that count, which is why forecast PEs are considered more valuable for high-growth companies than PEs based on historic earnings. Valuation theory is not predicated on what has happened in the past."


Also if I knew what their projected spends are going to be I will factor them in. We can go back and assess capital expenditure and labor costs over the year by year spend but I'm not doing that. I have a life. Large capex spends are usually once off spends. We don't know what direction A2 will move in. Will they build their own plant? with they contract out someone else to produce more formula? We don't know and that's just playing guessing games so I wont even attempt it. I'm simply pulling up a poster who constantly posts rubbish and see if he can actually put substantial info behind his down ramping.

They wanted reasoning as towards the high PE. I provided that. Also comparisons are important. You take the leading growth stock moving into China and its very easy to provide a simple comparison. If you have all day to sit there and break down business model/marketing/cost base etc etc then by all means go for it. If someone paid me to do it then yes I would love too..but unfortunately I draw my asssessments quickly over the computer with the knowledge I have gathered. There are a number of high growth stocks on the market and they are expected to grow rapidly over the next 1-2 years. That's why you assess other growth stocks the key one being Blackmore's and you will understand why some companies trade well ahead of current PE. Or maybe Blackmores should be 20 bucks based off the following..

"Many people invest on fundamentals - guaranteed growth is not a bankable fundamental. Fundamentals are facts you can bank on. If those who are in control of the majority of capital invested in this company deem the current price too high, then it will get adjusted down accordingly."

Didn't a whole bunch of funds sell Blackmores and BAL way too early? Well they obviously stuffed up and didn't account for forward PE.