Post by
zofftimusprime on Sep 01, 2016 4:05pm
Time to go long says Chou - You can still get in Joe454!
Francis Chou might be the best mutual fund manager you havent heard of. Chou points out Valeant has a ton of debtowing US$31 billion versus US$10 billion of approximate annual revenue and US$5 billion in earnings before interest, taxes, depreciation and amortization, or EBITDA. That is the big risk with Valeant. But at the same time, the company is quite profitable. Adjusted earnings per share for 2016 are expected to be between $6.60 and $7.00, putting shares today at a price-to-earnings ratio of approximately 5.5. You wont find better value than that in the market today. Chou believes the true value of shares is closer to $100 using a very simple method. Average valuations for the past century for blue-chip stocks have been about 14 times earnings. If we assign a similar valuation to Valeant, we have a company selling for approximately $100 per share. Thats nice potential upside for a stock selling at less than $38 today on the TSX.
Comment by
HedgeFunder on Sep 02, 2016 1:18pm
It's going to take for Valeant to recover, and therefore, VRX is a buy for those thinking "long term."