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No. of Recommendations: 12
Forbes columnist Victoria Murphy Barret said on Forbes on Fox this weekend to buy Blue Nile (NILE).

I disagree.

While I like Blue Nile (I own it and it was one of my Barron's picks here http://online.barrons.com/article/SB112630800547136959.html?mod=9_0031_b%20_thi%20s_weeks_magazine_main), the online seller of engagement rings looks pricey.

Consider this: If Blue Nile grows 29% a year for the next 5 years (matching analysts' forecast), 15% a year during years 6-10, 5% during years 11-20, and then 3% during the terminal period, its real, or intrinsic value, is just $44. At a current price of $41-$42 a share, this leaves you little margin of safety in case of miscalculation or bard luck (Ben Graham's words.)

If you MUST buy shares of this fine company, buy a starter position and then build your position over time.


Hewitt

long NILE
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