I have some cash finally arriving so I may well buy some around...

I have some cash finally arriving so I may well buy some around the 49/50c level. I am still hopeful of some weakness maybe my 40-c level really was a case that if it got down there it would be a screaming buy and I would be prepared to sell something else to increase my holding.

However just as that was the reality of my position my long awaited cash injection started looking like it will arrive in the next few days.

Here is my fundamental take on things. No news is just that no news. Which on the surface would have made me a bit concerned if I had an average around these levels. However on another level I am happy that they have had the time to bed down the Scanmedics business. I am extremely happy that they have not bought a whole lot more as yet. They don't , IMO, need to - I think the growth they are projecting is good enough and I think the market will re rate them.

My logic is as follows: 2014 yielded a 2c eps ( fully diluted basis ) It paid 1.25c Fully franked div. Thats a payout ratio of 62.5%. I think that suggests a range of 40% to 60% expectations depending on company cash flow. The interim distribution is 20% up and the forecast ( or my calculations thereof ) suggest that we will see about a 50% increase in EPS and thus if we are to receive a dividend 20% up then it may well be that we receive 1.5c that is then a 50% payout ratio.

I think the whole market is going to have a slowdown in yield expectations as we understand how tough the world will get in Australia. So whereas now I think yields are around 3.5% to 4.5% - I see this narrowing to a range between 3.00% to 4% over the next 6 months. If 4% If we receive 1.5c then given our growth we should be around the 3% - That would underpin the 50c valuation. Then on the EPS growth of 50% and the EPS of say 3 c I would expect a re-rating to around 20 to 25 PE. That's a 60c to 75c share price.

So my point is that assuming it doesn't have the constant drift downwards during May and June we may well see the base to this share move from what seems to be 50c to around 60c. So I am looking to understand whether I should be looking to buy around 50c as 60c is a 20% higher price and 1.5c fully franked is around 4.3% all inclusive yield and I think that's a great outcome given the growth I would expect here.

Are we going to see more acquisitions - I expect so but remember they are in the process , I assume, of replacing their last financial person so would be short of hands on deck right now. I noticed they stated that the integration of the acquisitions was almost complete in March. So I would expect them to only be ready to take on new challenges in June or maybe only the first quarter of the next financial year. So I am only looking to more growth by acquisition after they have a new financial person and they find the right opportunity. To my mind a 50% gain in EPS is more than enough this year.

So what is all this making me think - I dont think its a screaming buy right now but if you want to be in this you need to have accumulated some equity. I am not sure that waiting will help so I think I will accumulate some more if it hits 50c and keep a bit in reserve if I can see it drop lower. I think the 40c is dream only to materialize if there is a general market fall which can happen.