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https://boards.fool.com/paul-and-mark-thank-you-for-the-information-i-25772453.aspx
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| Subject: Re: True Religion | Date: 8/8/2007 9:02 PM | |
| Author: hheiserman | Number: 1366 of 1817 | |
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Paul and Mark - Thank you for the information. I requested annual reports last week and look forward to reading them. I see in TRLG's latest 10-K that they have 11 stores, which is why I thought it might be a retailer. My initial instinct tells me this company does not have a durable competitive advantage. There are four broad types of competitive advantages, according to Morningstar: 1) low-cost operator, 2) high switching costs, 3) intangibles, and 4) network effect. Just for fun, if we run TRLG's growth assumptions through the PIV-ER calculator (see previous posts), then IV is $34, PIV is 56%, and ER is 78%. The key assumption here is 24% annual growth for the next five years, which is our high estimate in this 3-scenario model. Another model that I use shows a 32% CAGR return every year for the next decade, based on last year's results. I take these numbers with a grain of salt because, as mentioned above, I do not know if TRLG has a competitive advantage. Nevertheless, since TRLG's chart looks impressive, I bought a starter position. If I own a basket of companies that have the same growth characteristics as TRLG and the valuations aren't obscene, some of these companies blossom into 10-baggers. Hewitt |
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