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No. of Recommendations: 6
Hi Ditty

The growth rate comes from analyst estimates for the next five years according to the Quicken site. I also looked at Yahoo and saw a similar number: 16.3%.

Even using the more conservative estimates of 12% discount rate and 15% growth, you get an instrinsic value of $21.53. That means CNXS is still a nice 33% discount to instrinsic value. Overall, I think it would be hard to argue this is not a good value right now.

Based on their dominance of their product category and the growing value of their Breathe Right brand I think they can easily grow earnings in excess of of 15% even without any new product launches. Any new products could boost that even more.

One interesting short to medium term trend that may help earnings is the decline in the dollar. This will help their sales numbers in Europe and Japan where they have been expanding their distribution system. The sales outside the US were growing in the 25-30% range versus US growth of 15%.

Overall, I think CNS has very good growth prospects and solid fundamentals (no debt, good cash flow, market dominance). I bought at $12.00 and may expand that depending on the next quarter report.

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