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Investing Strategies / It's Earnings That Count


Subject:  PIV-ER Date:  7/12/2007  5:34 PM
Author:  Duxx2001 Number:  1343 of 1817

Hello Everyone...

I like the idea of the PIV-ER... I think this is a great excersise that we must perform in our selections and portfolio.

But I have a question regarding the ER portion.

In the example that Heiserman wrote in The Street. He mentioned that WMT intrinsic value is around $71 and current price is $48.

Therefore, ER = (71-48)/48 = 48%

So far so good, but the above is just an expectation that the stock will jump to $71 right now.

My suggestion/question is that we should consider the time value of money.

In the above example, if the stock goes to $71 in 2 years our return will be 21% (not bad, but not 48%), and if it takes 3 years our returns will drop to 13%! (this does not seems as good as expected).

Any comments/thoughts?
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