share price probably got alittle ahead of itself at $7.60, but...

share price probably got alittle ahead of itself at $7.60, but end of day, its one of the BEST companys on the ASX. Theres a handful of them - the CSLs , the WOWs, the CCLs, the QBEs, the WORs

Bottom line - the best of the best get to enjoy higher multiples on their earnings; youre paying a PREMIUM for the best. And TOL is right up there.

Some analysts are saying theyll make circa 50cpents per share

So to pay a multiple of 12 on one of the best companys historically on the ASX that is investing in future growth opps abroad by dipping their toes conservatively rather than making HUGE acquisitions and investments, all the whilst having a near MONOPOLY on transports in the domestic market, isnt too much to ask

Im happy to pay 12 times the earnings of such an outfit

If theres going to be a recovery economically in the upcoming year, that PE multiple can increase from 12 to 15 or 16 quite easily. In tthe boom this company enjoyed historic PEs of circa 20!

PE 15 on 10% growth in EPS next year, giving an EPS of roughly say 55cents per share: 0.55*15=$8.25; This may be at the higher end of foecasts. Mid range we're looking at 48cents per share this year, and if we increase that by 10%, we get EPS of 53cents per share. Give that EPS a multiple of 15 gives a figure of roughly $8 per share

***its one of the best managed outfits and its a dominant player with a near monopoly. For that, their PE will be at the highest end of the range during the recovery and into the next boom. As economy recovers, the EPS forecasts will get much higher with a better economy and growth from investments abroad.

So a PE of 12 isnt too much to ask (on EPS of circa 50cents per share which some brokers are saying is very acheivable)

Technically its been oversold for a while

As we said, the 5.90-92 - 6.00 provides good support with many closes in that area in the past.

Getting in now, your downside (provided fundamentals dont change) isnt that much.

If market goes down another 200 points , id say around 5.80 give or take is where itll settle at.