Forum Archive Index - May 2000

["nick" <acummin@es.co.nz>]

        Name a company on the new zealand stock exchange

which has all the following

 

1) A positive growth rate in earnings per share in at

    least four of the last five years

2)  A low price earnings ratio relative to the growth rate  

3) an optimistic chairmans statement

4) strong liquidity, low borrowings and high cash flow

5) a substantial competitive advantage

 

        Number 2 can be assertained using PEG

which is arrived at by dividing p/e by average yearly earnings per share growth.

 For example if a company grows at 10% a year and has

a p/e of 20 it would be

      current p/e                                                    20

                                                                        --------     = peg= 2

       % average eps growth over 5 years apx          10

 

       To qualify under number two the company must have a peg

of less than one.

          

      I think i have found a company that meets all the requirments, they

are usually very hard to find but are nearly always a great investment.

      I will give you a clue, it isnt baycorp.!  Baycorp comes very close but

fails on PEG.    Baycorp is growing at around 30% a year, yet its p/e

is 32 which puts the PEG at just over one.       If baycorp were to drop to

around 8 dollars then it would qualify.

      I would offer a price for anyone coming up with a company meeting all

the criteria but im too tight.  So the winner will just have to be content

with being hailed a genius by us sharechatters.

             If you cant think of any i will give you one in the morning

 

  nick