standout performer, page-2

I forgot to include a discussion about valuation, which I believe is another compelling reason to ensure you have a BGL position. Here are some of my figures:-

DCF Value: 50 cents per share
FWD PER: 8
PEG Ratio: .125
FWD EV/EBITDA: 3.5
EBITDA M/C Mult: 3.9
FWD Div Yield: 1.3% (fully franked)
FWD R.O.E: 20%

Obviously only the DCF provides an expected value. Many of the other ratios/multiples are simply an indication that BGL is undervalued as to peers. I have found a low forward PE combined with a low EV/EBITDA multiple is a very good indication of a great opportunity.

Of course the big elephant in the room is Greece- Euro Debt and the markets tanking following a big credit freeze and accompanying deep recessions. Who knows when/if this is going to happen. You cant predict economic contractions any better than expert economists who lets face it have a lousy record. All you can do is buy great businesses cheaply. One mitigant to any recession is that internet usage and data content rates are strongly growing and are probably somewhat inelastic to GDP contraction (more so than other constituent parts anyway). I guess the point is that there is margins more earnings certainty and visibility for a company like BGL as compared to financial institutions (big exposure to offshore funding and domestic property market), miners (leveraged to highly volatile commodity prices which are looking sick), retail (already in a coma), engineers/mining services (same problem as the miners - look at a chart for engineers and mining services from July 2007 to March 2009 - scary), insurers (increasing number of disasters, high AUD for offshore earings, pathetic investment returns - want confirmation check out the QBE chart) - whoops I have just ruled out 90% of the ASX100. On top of this BGL has absolutely no long term debt. And its short term debt is immaterial. This is exactly the sort of company you want to be holding in a credit crunch - strong cashflows, providing vital good/service, no debt obligations to leverage to the downside any weakness in revenue.

Of course DYOR, consult your own qualified advisor etc etc blah blah blah