@justinp You could very well be right. I completely agree with those two rules to never buy a stock in downtrend/free fall. However for each buyer there is a seller and for each seller there is a buyer. It is a zero sum game. The person that ends up making money is the one who predicts the correct flow in share price.
There will come a point in time where the share price reaches a turning point. I believe we are definitely below intrinsic fair value, hence why I am buying now. Short term I see this fluctuate around the $2.60~$2.80 range. We are already at the bottom end of that short term trading range.
Mid term I see it possibly recovering to $3.30 and beyond. I only bought in today at close ($2.64).
ABC Learning is a similar company but the mistake they made was that they kept expanding without managing their cash flows. Obviously acquiring smaller centres and paying outrageous multiples is one of the reason they failed.
G8 Education has stop acquiring centres as far as I am aware. I have been in and out of this stock far more times than I can remember from 2014~2018 and I've never had a lost. Fingers crossed stays that way.
Reason I'm buying again this levels is as I have mentioned above.
- Directors buying
- Change in dividend structure/drop in dividend (share price drop already factored in)
- New government regulation starting in 2 July 2018, should see an increase in intake for centres and re-rate will follow
Again do not classify GEM with ABC. ABC had unmanageable debt levels and were on an acquisition spree. Similar to what happened with SGH.
You are saying that revenue will continue to decline, which I do not believe will be the case. There is always booms/bust - economical cycle of business.
Based on share price of $2.71
|
{caption}Value{/caption} |
|
|
|
| 1 |
|
Company |
Market |
Sector |
| 2 |
P/E Ratio |
13.45 |
16.80 |
17.59 |
| 3 |
P/B Ratio |
1.40 |
1.60 |
2.03 |
| 4 |
P/E Growth Ratio |
0.99 |
1.77 |
1.52 |
| 5 |
P/S Ratio |
1.45 |
1.85 |
1.91 |
Let's see if I got this right.
(20min delay)