I have been slowly reading "The Intelligent Investor" by Benjamin Graham, and I thought it'd be worthwhile pointing out his intrinsic value formula and then compare it to CXZs current share price.
According to Graham, Value = Current (Normal) Earnings x (8.5 plus twice the expected annual growth rate)
If you assume that CXZ has absolutely no growth prospects going forward, it would have an intrinsic value of 2.975c (0.0035 x 8.5).
If you believe that CXZ has the potential to grow earnings at 20% per year, the intrinsic value of each share would be 16.975c (0.0035 x 8.5 + 20 x 2).
I personally believe that CXZ has the potential to increase its earnings sustainably in the long term, and that is why I am not worried about the paper loss I currently have with my CXZ shares. I'll simply take it as an opportunity to dollar cost average my purchase price, so that when the share price does start to reach closer to what I believe is its intrinsic value, I will obtain greater compound returns due to having a lower share purchase price.
CXZ Price at posting:
1.8¢ Sentiment: Buy Disclosure: Held
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