buying RFG at $4.35, page-274

I sure hope there is not a takeover as I would have trouble finding a better investment than RFG is right now. It is a much better company than it was 10 years ago, thanks to diversification away from just the big franchise names. Domestic franchises are now only contributing 44% of EBITDA. Ten years ago this was 100% with only two local franchises. RFG is now like a V8 engine. One or two cylinders mis-firing doesn't really matter much.

Keep in mind that EPS has grown by 16.2% CAGR over the last 10 years, right through the GFC. Guidance is for much the same this FY. Thanks to its coffee business, Hudson Pacific food, and overseas expansion, it almost doesn't matter if growth in the Australian franchises is below average for a couple of years. HDespite all the takeovers it has undertaken, gearing is still very manageable at around 31% and ROE is above 15%.

I would have trouble finding another quality investment like this on a FY17 P/E of 12 or under. Investors do need to learn to cope with large share price variations though, as shorter activity is rife in most mid-sized stocks. I don't let it worry me.