Hah! You had me in stitches. My wife actually came up to ask what I was laughing about. I told her I just bought into falling-knife Magellan, and she wasn't impressed. She urinated on me, and walked off. Not so different to Tassals, to be fair. Hit me up on Twittter if you're there.
@Chella They're pretty wide valuations, and I think that reflects the range of potential outcomes here. I find it really hard to guage what an appropriate PE ratio for Magellan should be: if it declines, it'll drop to 10-12 probably; if it grows <5%, it may be around 12-15 in normal periods; if it can grow at 5% and meet their 9% target, then 18-20 is reasonable. But I think the argument that based on forecast FY22 PE is ~15 makes it cheap, hmm not sure that washes with me. I like to think of this as one of those Peter Lynch 'stalwarts', and hopefully you're getting a quality business.
Also the current dividend yield is fixed at the time you buy the stock. If the share prices rushes to $40, $50 or more tomorrow.. I still get my 6.4% I locked in today. Hopefully, they grow their dividend. And if they grow that dividend at 3.6% p/a, I'll get my 10% IRR. Again, not a very high hurdle. Though, that's how it always starts with value traps...
MFG Price at posting:
$35.37 Sentiment: None Disclosure: Held
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