lets look at fundamentals

look fundamentally they came with a very good report in feb that caused a mass rally in the stock all the way up to 7.60 from 4.40

I reckon theyll make about 48cents per share minimum given that they made 23.9cps in the first half and they gave a pretty good outlook in the first half report.

48cps EPS , multiply it by a multiple of 15 (for a defensive near monopoly domestically and high growth rates possible from their base internationally) and you get $7.20 fair value

For 2010, i think if the world recovers a little , and given the numerous acquisitions and contracts theyve gained, you could say that EPS could grow by 10% from this base. Thats 53 cents per share. Again, give a forward 15 PE and we get 7.95 fair value.

So a value of say $8.00 is fair value for the next year given that they can make 10% growth in EPS. Share price now is circa $6, so you got 33% upside.

***Futhermore, I take that all these little acquisitions are taken out of strong cash-flow and the debt facility they have.

That means that theres no need for equity raising, PLUS, that means that further acquisitions can come from existing debt and cash-flow

End of day, this means that EPS can be increased WITHOUT SACRIFICING RETURN ON EQUITY AND RETURN ON ASSETS! (because equity wont br increased via cap raisings, nor will debt get bigger!)

So what this essentially means is that EPS will go up; Return on Equity will also go up along with EPS increases from acquisitions; Return on Assets (return on EQUITY+DEBT) will thus also go up as EPS goes up from greater profits from acquisitions.

So this all bodes well for the companys fundamentals if true

Im assumming here that theres no need for equity raisings in light of all these little acquisitions; and theres no need to take on more debt as theres an existing debt facility which allows more room for further acquisitions; cash-flows are very strong too, so no need to dilute equity or increase debt.

All in all thus, EPS can grow via acquistions that will add to EPS without diluting equity or increasing debt, and thus return on equity and return on assets will also grow.

I also assume that our Management is going ot make acquisitions of companys at good prices and that have above average returns on their equity ala Tol.

Thus a PE of forward 14/15 is easily acheivable; 10% EPS growth also very acheivable with all the acquisitive behaviour and contract wins

Someone tell me im wrong?

i may have missed something out