Forum Archive Index - May 2000

[chris <CMR64@student.canterbury.ac.nz>]

My guess would be sky city.




Nick wrote : 

       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

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