A Favorite Stock, NICK

[DesertCat]

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I've been looking at this stock lately. Any recent thoughts, DC? What is your feel about the stock's true value, in $/share terms?

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I was overly optimistic when I first got into it. I thought they would grow earnings 15%+ for a long while. Instead I was seeing the peak of their cycle which distorted things. I still think they will grow 10%+, but realize they haven't even seen the worse the national economy could offer. Higher interest rates and unemployment would hurt them worse, though their customer segments are clearly dealing with higher unemployment now.

I take comfort in their conservative financials and management. Any DCF analysis would tell you that a 10x growth rate merits a 20 PE, but given their small market cap I doubt they'll get one until they are much larger. My guess is, barring a national recession, in two years they earn more than $1.50 per share and trade north of $15, maybe close to $20.