Post by
theinvestor22 on Sep 27, 2007 1:36pm
50% Annual Growth Rate for a P/E of 10?
CNOA is a lovely GARP opportunity, one of the few great ones available right now. From my point of view, here's why:
- The company is in a niche where you can sell all you can produce because organic products are in demand from increasingly affluent consumers
- There are numerous national and international expansion opportunities
- CNOA's products have great brand recognition and command premium prices
- The company has signed a number of retail and wholesale distribution agreements lately
- The company has been growing revenue and earnings at 50% annually and should continue to grow in a robust manner going forward
- Earnings guidance of $6.7M ($.13/sh) for 2007 should be revised upward to something substantially above $.20 soon.
So, what P/E do you assign to a company like this? If this were in North America, the market would assign a P/E of something well in excess of 20. Given that it's in China, I'm thinking something closer to 30. I have seen Chinese P/Es of 50+ on companies growing at less than half the rate of CNOA. That's the potential of being in China right now.
Being a GARP investor, I rarely consider P/E's of greater than 20 on any company, unless they're truly outstanding. I think CNOA is. Anyone else agree?
The company is terribly undervalued at current prices, IMHO. Once the price doubles from here, we should see a move to the NASDAQ.