I've been following this one since you
first mentioned it. I like the business
itself especially since anyone can
understand it and since they seem to do
well during recessions.

Here's my back of the envelope (which
may be too conservative):

- Current cyclically-adjusted EPS: $1.80 to
$1.85 (thus, I feel current EPS are above
trend).
- 8-Year forward EPS growth rate: 14%
(They've done 16%/yr the last ten.
Consensus has 17.3% EPS growth next five
year and VL has 18.5%..but analysts
always seem too optimistic.)
- Results in end 2020 EPS of $5.21.
- Apply conservative multiple of 14.6x
(historical P/E is more like 17...but
I believe we're still in a period of
P/E compression that may or may not
last until 2020.)
- Gives a target range of $75 to $80
and an annual return of 8% to 9.5%.
This should out-perform the S & P
nicely over this time-frame. However,
I think there might be better risk/
rewards out there currently.

- A target buy range of $25 to $32
would yield a very attractive 12% to
15% annual return under the above
scenario and provide an increased
margin of safety.

Whaddya think Jim?

Thanks,
John