"...now if I could just figure out how to properly value these companies. I just got a book called Value Investing: From Graham to Buffet and Beyond and maybe this is a good stock to try out some of the things the author mentions."Here's a link to my own recommended reading list:http://boards.fool.com/Message.asp?mid=14838155The thing to keep in mind with valuing businesses is that you can never be very precise. Who can say what free cash flow will be 5 years from now? Only time.An exercise I often rely on is to develop a set of possible scenarios for the business: as many as possible. I try not to leave out any feasible scenarios. Then it's actually not that difficult to get a good sense for the value of the business for each scenario. Afterwards, I will try to estimate the likelihood of each one. The end result should give you a sense for the range of things that might play out and a sort of probability distribution of the value of the business.Keep in mind that the worst and least likely scenario can potentially happen as it did for me recently with ASW: http://boards.fool.com/Message.asp?mid=16309681If you scan down to the scenarios, Scenario 5: All hell breaks loose within the business actually occured the day after I posted it and the price actually closed very near to $10, down from around $26 the day before. Bad stuff happens.DeliLama
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