what's happening with rcr?, page-13

Hi March09

I think pretty much outlined it in my last post however here goes;

"whatever the corporate margins and financials may be" - that statement is of most concern. Basically what you are saying is that the "business" itself doesn't matter as long its cheap. The maths doesn't lie - a business cannot grow faster than it's ROE without raising capital or debt.

Therefore even at 10% annual EPS grow analysts expectations are that RCR is going to execute efficiencies in its business and increase it's ROE.

Also you should aim to think independently of analysts. I can see issues in those forecasts based on my understanding of the numbers already.

And for the record: ANG EPS will be approx 19 - 20.1cps this year somewhere between 25 to 27cps in FY11.

It's the rate of growth and the safety of your principal that you should be most concerned with.

Which business is cheap if one is growing at 20-40% a year and the other is growing at 5-10% a year Business? that is the question you need to ask. The power of compounding means that only a couple of years and the faster growing business is worth a hell of a lot more than the slower one.

If you are hoping for a short term correction due to oversold nature of RCR then you are gambling (and TA would be better used for that, and RCR is in a serious downtrend)

I guess we will see, but I urge you to look at the businesses rather than just the price - you want to buy great businesses not mediocre ones.

As I mentioned in my last post - the ratios you are using for comparison are only relevant if the underlying businesses are comparable, which they are not.

If you are an investor for the longer term then, personally, I think your in the wrong stock.

Cheers

Sauce