In the absence of clarity in future earnings, very low NTA and significant debt, how does one value KNM?
? 10 sen / share
A quick look at KNM
http://spreadsheets.google.com/pub?key=tnYPvXKu8my2Fsri8qR60oA&output=html
A related story:
One-time events that help grow companies for a short period usually affect prices significantly, but such changes are often temporary.
In the mid-1970s, again in the mid-1990s, and once again in the mid-2000s when oil prices went up quickly, many companies supplying oil-drilling services became high-growth companies. However, they could not sustain their growth.
For example, Global Marine, an otherwise well-managed company, was trading at around $35 per share in late 1997, but oil prices went down in 1998, and Global Marine's stock price quickly retreated to less than $8 per share.
A careful investor looking for an outstanding long-term growth company would have avoided Global Marine because the growth was from a one-time event.
It was and can be difficult to know which companies would have sustainable growth.
On the other side, note that at the time of going public, even Microsoft was not an outstanding growth stock because it was not clear that the company could sustain its growth. However, over time, it became clear that Microsoft's products were immensely successful. Microsoft was a near monopoly, and the number of customers for those products would increase for many years to come. At that point, it was a good growth stock worth investing in.
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment