any1 notice the fall to 16.50?Previous strong supprt at 16.80...

any1 notice the fall to 16.50?

Previous strong supprt at 16.80 smashed through opn volume of 2.5mill which is greater than average volume i guess

Whats the NEWS? I cannot see anything

Some big fundies mightve sold out some + taken massive profits they made on this one , but WHY?

the stock has 26% growth this yr and 17% growth next yr and trading on a PE of about 14-15 whereas Sonic has 6% growth this yr and 12% growth next yr and trading on a PE 12-13

ROE is 14% and ROC is 10%; If they acheive 25% growth in EPS and dont make any cap raisings or take out more debt (why would they UNLESS they make a remarkably HUGE takeover), their ROE should be 25% stronger at 17.5%, and ROC at 12.5%. These are pretty darn good numbers buffet style. Only thing is that DEBT is big with this coy, but ROC is 12.5% and CASH FLOW is MASSIVE when you dont include depreciation charges; Interest cover was 5.5 for 2010 and now with earnings set to be 25% higher, that will only rise further to 6 times+ the interest payments(the highest its ever been).

I guess the only drawback is the high debt, but again theyre making a great return on this debt after tax and after paying back interest at say 8%+; Theyre effectively borrowing money and investing it and making 12.5% after paying back the interest to bank plus tax etc i.e the money they invest from borrowings returns them about 20% ex tax and interest repayments.

Not a bad biz

With 25% growth this yr and 17% next, PE should be 17-18 easy going on historic and 15 going forward, thats a valuation of $18.70 going on a forward PE 15

Pure fundamental analysts will tell you that the debt is too high tho; the other option is SONIC, but it offers little growth and its ROE is 11.5%, ROC 9% and debt 35%, with the ROE set to grow at ONLY 3% this yr and 12% the next provided they dont issue new equity or issue more debt.

Sonic thus needs to make more acquisitions to grow, and that entails more debt.

RHC has already done that and has invested the funds well at circa 20% return on their projects , and thus has a higher ROE and ROC

Its the better performing business with much higher growth yet with a little more risk in terms of debt

Dont 4get the line of business that theyre in (hospitals) is a very STABLE and DEFENSIVE indusry

Sonic is RISKIER in that i believe a large chunk of the biz is pathology as opposed to more STABLE earnings from hospitals

I dont have a position but am looking to buy