Good discussion on the RYM thread
thanks for your comments Queensstfarmer
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Good discussion on the RYM thread
thanks for your comments Queensstfarmer
Cheers NZsilver. Perhaps the "too boring to talk about" needs to be updated?
RYM is a great stock - I think that most of us agree that it's one of NZ's best - but Queenstfarmer makes a valid point in cautioning that the SP may have run a little ahead of itself. Come to that, perhaps the whole NZ market is running a bit hard, weight of money/low interest rates and all that. I think I'll watch from the sidelines for awhile.
No just putting a view out there. Yes I am looking at it from a dividend angle. The pyramid analogy is based on all the investors whom get in now that its sky rocketing to wherever it may head. Unlike a pyramid scheme they won't lose their money because they get in later...however I don't see them making the huge capital gains previous investors have over the past 5 years. I see them relying on a generous dividend policy from Ryman....which in my view, is quite some time off.
If you want a dividend stock, buy Telecom. Great yield, shame about the share price.
There are plenty of yeild stocks out there, RYM is not one and I assume no one is buying or holding RYM for its yeild so why bring it up (just trying to understand). Seems as pointless as talking about XRO and profit ;)
Thank you macduffy...I did say earlier...too much...too soon.
M think will run to 9.90.
I presumed that the $6.90 figure was a 12month target. However the market appears to assuming it needs to get there by tea-time.
Best Wishes
Paper Tiger
If you look at the markets and in particular a rising stock such as RYM,knowing that it has risen so steeply and that the market is jumping on anything looking good,AND you gaze at charts,you will know that they always correct(except with the case of DIL and XRO)but they are special cases.You Never lose money taking a profit,so I would lock in those gains and be pretty chuffed,cos there is a darn good chance the market will correct. The Risk: that ryman have something up their sleeve that you don't know about.
Can I suggest Sparky that this is the same dilemma that folk like my self who have quite significant dosh tied up in res prop's are facing ..given that these as well as have/are increasingly gaining in value....
As we know those folk moving into Ryman facilities have to sell there houses first.......so for me at least I see RYM both as sharemarket beast but also a res property play cheers troy...
http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by NZSilverhttp://www.sharetrader.co.nz/images/...post-right.pngSparky what did you do with SUM and what happened there?
That was a Rhetorical Question Sparky...
But great to see your honesty, I think RYM is a hold.
Sparks
- your homework says RYM is a solid long term 'hold', you and nobody else knows what it may be worth one day
- you and some others think it has got ahead of itself pricewise. It probably has been ahead of itself for sometime
- some (even you seem to agree) the market might fall quite a lot - if so when, we don't know
- you seem keen to protect the profits you have already made, or most of them
The adages let profits run / never try to time the market / and as Mr P said the market giveth but the market taketh away just as quick
For stocks that keep rising I have for a long time used a thing called Average True Range (ATR) as a sort of trailing loss'. Google it and see what it means as investapedia or something will explain it better than me
Essentially when a stock is consistently rising over so does the ATR. I use the ATR as the price to sell if the price starts falling. You can have tight 'stops' by using a ATR of 2 or loosen it up a bit by using a factor of 3 or 4. Nothing worse than selling and seeing the price go up again eh. To me a tried and true method that suits me. Like I I like holding stocks for years if they keep rising but I am ready to sell if indicators look like its going to down.. You'll never sell at the top but collect most of the gains.
Here is a chart of RYM with the ATR at 4 (4 times Average True Range) shown. You can see it works well for RYM and would have kept you in for the last few years (my data was a bit wonky prior to 2011 so didn't go back any further). I confess that I don't sell the exact time it hits the ATR but wait a day or two - invariably the price seems to recover. Eventually you will leave a percent or 2 on the table but have made more than that in the times the price has recovered. Would have avoided selling in that recent slight dip.
On this chart the red line is at 5.51 after todays action. I wouldn't sell until it gets back to that price (or higher if the ATR goes up). I don't have any RYM so don't need to decide but sure you will do the right thing
mmm..appreciate the post....how much do you attribute the health of the residential housing market to the SP of RYM....thus far I can only assume that it aint much...cheers...
A listing in Australia makes sense as does a placement over there to supercharge Australian growth.
I think Ryman should be really fair to our Aussie brothers and do this at $A6.90 :D
People thinking this stock represents something akin to a paramid scheme are on the wrong thread. Pop on over to the XRO thread and fill ya boots...
Do you mean pyramid Roger? I was merely making a parallel...I feel investors getting in this late on a sky rocketing sp may find they've hit the peak. Just a view.
Yes thanks, too many wines for dinner.:) As long as someone coming fresh to the table has a long term view they should be fine. It would appear with almost unlimited growth in Australia this company can grow at 15% indefinitly. Its underpinned by compelling demographics, a shortage of housing in New Zealand and a growing demand for healthcare services, aided in no small way by the best management in the business. Take a five year view and you can't go wrong. What other company has shown such consistent growth all the way through from prior to the GFC and all the way through it ? Imagine if we ever got back to good economic growth conditions again...
I'd really like the stock to track sideways for a while so I can accumulate some more, ironically I'm quite disappointed to see it up 20 cents today, just means I have to pay more next time.
This company has a huge reputation and is widely regarded as N.Z's premier growth stock with its proven and highly profitable business model....which is chalk and cheese compared to one of the other stocks skyrocketing at the moment on nothing more than a wing and a prayer. There's your pyramid scheme, in nothing more than my humble opinion of course:)
Hope it was a good wine! Agree re a long term view and as investor that chases the dividends...I thought I'd put a view things out there to get others opinions. Yes it may be some time before Ryman can afford to pay out decent dividends and they may be fine with you. I'm still of the opinion that the current sp is a number of years too early.
Yeap, not worried about dividends. Its no bargain based on known public information that's a given but its a big call to say its years ahead of where it should be. Next months annual result will give further insights but I suspect they've been going absolute gangbusters this summer.
High qulaity stocks are thin on the ground on the NZX and we have interest rates at 50 year lows which always has an expanding effect on market Price Earnings ratio's and money in the bank will shortly be subject to potential percentage confiscation..not the safe haven everyone thought it was..arguably fuelling the rush to equities ???
Does anyone else see a correlation between the on going SP appreciation of RYM...and Res prop....valuations....
It almost crossed my mind to sell a few RYM at $5.70 the other day ... the trouble was that if I did, I coudn't think of anything better to do with the money than use it to buy RYM.
Reflecting on this, I decided that a sell and re-buy amounted to nothing more than a gamble on share price, and I am not into gambling.
Whatever price RYM settles out at a month after announcing this May, the sp will grow by at least 2 cents a week on average every week for the next year or two and will only accelerate from there.
If you are happy turning $6 into at least $7 tax free in 12 months plus 3 dividend payouts , then buy.
PS. Ryman announced something ages ago about listing on the ASX didn't they?
Taking house prices and RYM shareprice on a monthly basis since Jan 2005 there is a 82% correlation between the day. This is very high and says (in theory) movements in house prices accounts for 82% of the movements in RYM shareprice
The annual changes in both makes an interesting chart - both lines the 5 change from a year earlier. Spooky eh
That's what the numbers say anyway ..... what you have to believe it
Jeez amazing what you can do waiting for a plane
Hits the nail on the head perfectly, in my opinion.Quote:
It almost crossed my mind to sell a few RYM at $5.70 the other day ... the trouble was that if I did, I coudn't think of anything better to do with the money than use it to buy RYM.
Makes Sense-They are basically a very well run property rental company.
Their greatest asset is property,along with the buildings and expertise.
They make very good use of it in terms of cash flow.
If property values decrease,they would still get cash flow ,but would certainly lose some asset worth.
Not sure how that would affect further purchases,but as long as their equity is good ,I would imagine they would be able to weather the storm,even if the share price suffered a bit.
As a landlord myself,Im hoping this scenario doesn't eventuate.
Winner - another thing. you have correlated it with share price, not profit. That just means that RYM was a steal at the point when the property market, and I assume the share market were at a low. If you compared to the NZX50, is there a similar correlation? Don't the finance guys call it the beta as apposed to the alpha?
$6.00:t_up:
At least somebody asking whether there was a relationship between house prices and RYM share price sparked a bit of debate.
Somebody asked so I dis the sums and since 2005 the correlation is 82% - and because I wasn't really thinking I should have said that the variances in one set of data (either one) explains 67% of the variability in the other set of data(not 82% as I said because I forgot to square it)
I made no mention of the causality or anything but that could be an interesting discussion
Haven't got the full numbers of people in different cohorts on me but it would appear that the house price / shareprice correlation is far stronger than than number of people over 60 and the shareprice ... but i leave that to another day.
Sparks ... do you have any numbers around the number of people who live in retirement villages?
No poetry here - nice one, Moosie! - but if an OCR increase has a negative effect on the property market it would affect potential RYM customers, either by making it more difficult to sell an existing home or by reducing the price, whether sold on the open market or via RYM's sale facility. Overall, probably a neutral effect?
or whether theycan afford anything after student loan repayments come out of the pension
Thanks Winner.I would have thought the co-relation would be about what you said.Not only house prices but over all confidence to invest.It all adds up.Cheers
From the mouth of local retirement village manager;"It is care and future care that motivates people to move into a retirement village."
Does the property market affect their decission I asked."No,it is their concern of care and future care."
I have only two experiences to form an opinion from.
My mother who lived in Maroochydore could no longer properly look after herself.My brother,who lives in Hobart,while visiting our mother rang me and told me the situation, and he moved quickly to get her into a retirement village.Our concern was her safety and care.NO consideration was giving to the property market.
The other experience is with my mother in law who needed to get care as she was suffering dementia.Again NO consideration was given to the property market.
The retirement village manager just happens to be a friend of my wifes who had called in for a cup of tea.
Confirms to me what I felt was the case.
turmeric;
The village property manager was telling me about a couple who want to purchase a unit in her village.Main consideration is, should one of them die the other will be safe and receive care.She does not have a unit avaliable at present,so they will have to look elsewhere.
So no need for care at present.
They have sold their house with a long settlement date,to give them plenty of time to acquire a retirement unit.
So in this case I would think it is the property market playing a major/big part in their decission.
Whether that is more important to them than their peace of mind I don't know.
There is undoubtably some linkage between the real estate market and the ability of elderly people to move into retirement villages but in my opinion nine times out of ten the potential resident is selling a bigger house to move into a smaller retirement unit in a village that they perceive will look after their needs well.
Becuase the transition almost invariably involves moving into a smaller unit that's more manageable, there's effectivly a trading down in size and value, hence from the vast majority of retirement village uinits I've seen there was a high level of affordability for the average potential resident in that area.
I visited all the retirement villages in the Hibiscus Coast before helping my parents to make the decision that best suited their needs. In their case they sold a very, very modest 2 bedroom home in Red Beach Whangaparaoa and ended up with a lovely sunny 100sq metre unit, money for a new car and $100,000 left over as well. My mum really enjoys living there and is extremly well supported now that Dad has passed on. Ryman in Orewa did a reasonable job of looking after my Dad during his advanced dementia stages.
Discussing the state of the Auckland housing market yesterday with the N.Z. general manager of one of the major Aussie owned franchise chains, he told me that Auckland homes that are watertight and in reasonable condition are in exceptionally strong demand. No doubt these sort of boyant conditions makes selling retirement village units incredibly easy, hence why I'm expecting a bumper result of the annual result next month.
I personally believe the stockmarket in ramping up Ryman's price in such a manner is saying that these boyant conditions will continue for the forseeable future and effectivly means that revaluations are perhaps baked into normal operating earnings too. I also believe as posted recently that money in the bank is no longer viewed as a guilt edge security it once was due to the new banking regulations and there's a rush to find high quality high growth and very safe stocks.
The share price seems to have went down instead today on high turnover while SUM is going up, did I miss something or just a small correction due to its recent rise?
The number of people over 75 has increased by 2.3% pa over the last 10 years. Projected growth rate is 3.5% pa over the next 20 years. Similar rates apply to over 65 year olds
Everybody talks 30% pa plus growth for the likes of RYM and SUM
Obviously got to come from more than the increase in the number of potential customers (old people) because that is going to be only 3.5% pa
Maybe the %age of old people going into homes is going to increase (so we get population growth PLUS a greater % of potential punters) - they call this increased PENETRATION in the trade. What are the drivers of having more people wanting to move into homes? There is a multiplier effect here - if the % says the same customer growth remains at 3.5% but each 1% point increase adds more than 1% point to the growth rate. (say 10% in homes now and that goes to 11% demand (number of units needed) increases by 10% for instance)
Suppose another drive of growth is market share - are RYM and SUM for instance expecting to grow share of punters going to their villages?
Outside of the demand side is a lot of the profit then coming from the fianancial impacts of valuations, customer churn (poor sods dying) and other factors
Looks like all are important - because if nothing changes demand (ie number of customers) is only 3.5% pa (in spite of the headlines like doubling the numbers of old people etc)
Interesting. Maybe financial engineering in some form or another is the real profit growth engine?
Sparks - have you found out for me yet the number of people living in retirement villages at the moment (even better if you had a number for 5 or 10 years ago as well). Might build a model to see how many units are needed in the future under different scenarios to see what a likely 'demand' growth rate might be
Quote:
Everybody talks 30% pa plus growth for the likes of RYM and SUM
Obviously got to come from more than the increase in the number of potential customers (old people) because that is going to be only 3.5% pa
Extract from Summerset CEO's AGM presentation on 30 April.Quote:
The number of New Zealanders living in retirement villages continues to increase rapidly. Among over 75 year olds, the number of people who call a retirement unit 'home' has grown from 5% in 1998 to 9% in 2011. If that growth rate continues New Zealand will need more than 21,000 extra retirement units and 20,000 aged care beds by 2031.
Ryman's stated objective is to achieve 15% growth per annum. I believe Summerset's profit growth will be higher than that for the next few years as it seems to me they've only recently hit the critical mass necessary for rapid profit growth. I'd be surprised if it wasn't quite a bit more than 30% for the next few of years in particular as they've only recently brought building development in-house and have stated they're looking to achieve substaintially higher development margins, (Ryman's development has been handled in-house for quuite a considerable time now).
In the States I understand retirement villages account for 15% of the aged population, sorry can't post a link as I can't remember where I read that. In my view the treand will continue based on a growing recognition of the quality of life a high quality retirement village can bring to one's retirement years.
I don't think a 15% penetration of the aged population within 15 years is unreasonable, feel free to extrapolate that trend into your models :)
A few weeks ago I added aggressivly at $5.41 on the basis that this is the best long term growth stock in the market and as I have a super long term viewpoint now the hghish PE doesn't matter. It never entered my mind that a few weeks later they'd be up a $1 to $6.41, I thought they'd be about $6.50 by the end of the year or maybe by April 2014.
Wish I'd gone even harder now.
Yeah wouldn't it be great if you could have 20/20 vision of the future :)
And 100,000 go through at 6.47 after close.
777...you beat me to it...probably it was an insto...and probably want a return on that...I often reflect on when I last saw a SP curve like whats occurring here...sure DIL and Xero are there....when I reflect on the 80's.....many companies had similar trajectories in SP...but at the end of the day..it was all waffle and hot air....me thinks that the same could not be said at present times.
I at times "flirt" with a founder of RYM....its my belief that in a few years ...after another 1/5 split....this outfit continue to perform....cheers all.
People are baking in annual revaluations as part of normalised earnings IMO. To some extent with the ever escalating cost of construction, (in no small way affected by almost monopolistic product pricing by the major building suppliers), I feel this sort of approach isn't entirely unwarranted.
I also feel the market is saying that ultra low interest rates are here for the forseeable future and considerable expansion of historical PE's is therefore justifable and at the risk of sounding like a broken record, due to the new banking regulations money in the bank isn't safe anymore so smart money is looking for somewhere where it really is safe. In effect one faces an equity risk in the bank, (they could confiscate 20% or dramatically more of your money in a crisis), for a pathetic return of 4% on term deposit before tax, what a great deal, (NOT) !!
Ever since that change the Ryman price has become supercharged. Coincidence ? or a flight to arguably New Zealand premier growth and wealth creating stock that it could be argued is in fact safer than money in the bank ? You guys decide but I won't be selling, this stock is a winner.
Peope investing now are thinking of 2014 earnings and beyond incl revaluation gains not 2012 earnings without reval gains.
dear Moosie its hard to argue against your predictions ...,.however may I say a few things may be against you...BHP for example has been truly dreadfull...same for Rio...so goes NZ wealth...as both MKTS are connected....the building costs increasing in CHCH are obscene and in all likely hood false and embarrassing to most of us...many of of us (here in CHCH) are bewildered as to the new "construction world"....
re interest rates...I do not agree with you...
Its only a matter of time. I've heard what John Key has had to say on the matter and my money is on this coming in very soon. Its effectivly a done deal, you mark my words.
Sparky - Its only natural to want to whip some cream off the top when you're sitting on such fantastic gains..., just relax and enjoy some of it...after all if you can't enjoy some of the cream from time to time what's the point of it all :)
Moosie - The way I see it, due to the systemic banking issues thrown up by the GFC the developed world as a whole is locked into a low interest low growth, low inflation path for many, many years to come.
Only time will tell moosie.
Here's a view on Ryman's EPS. If one assumes revaluation gains are baked into normalised earnings due to the natural churn of retrement village units and the ever escalating construction costs then :-
Reported earnings per share for 2011 were 20.1 c.p.s.
Reported earnings per share for 2012 were 24.3 c.p.s.
Estimated earnings per share for 2013 - est 29.2 c.p.s. (Simple extrapolation of last years percentage growth)
Estimated earnings per share for 2014 - est 35.0 c.p.s. ( As above)
Forward PE for 2014 at today's closing price of $6.47 = 18.48, which for a company with a fantastic growth record and great prospects in Australia doesn't look too expensive to me.
Note also this company's cash flow increased 27% last year and no matter how you slice and dice the EPS and valuation theory...we all know its really all about cash flow.
Yes, got a bit forward looking with earlier comments, my mistake. I guess some people will wait for the legislation to be enacted and then look for other alternative investments, (I suspect the vast majority won't even realise the new risk they've inadvertently exposed themselves too), whereas those that realise the game is basically up for low risk term deposits are already doing something about it, hence the rush to high quality growth stocks like Ryman by forward looking investors.
The market is clearly looking for a very strong result from Ryman next week.
P.S. I think we need to change the title of this thread, Ryman is anything but boring:t_up:
Of course it's boring. All it does is go up.
I reserve the right to change my tune when the results come out and they reveal their evil plan for world domination but at this moment I see no justification for this share price.
I believe that Ryman will be worth this much in almost exactly 3 years time, 2016.
Just because it has a good model which gives the best certainty of consistent future growth does not mean you should pay any price for it.
We have a Ryman bubble, there is a much speculating in this as in certain other stocks on the exchange.
I sold some of these less than two weeks ago at $5.70, successfully rode ATM from 60c to 74c and have not made significantly more than I would have done not selling.
Two months ago you could buy for $4.59, unbelievable.
Best Wishes
Paper Tiger
Disc: Still own lots.
Well First N.Z. Capital who some on here claim are N.Z.'s leading broker that do the best reasearch came out the other day and valued them at $6.95, (one would presume after recently meeting with company exec's and having some in depth discussions about current trading conditions and future plans...). Next weeks annual result is eagerly awaited.
P.S. A lot of stocks appear fully valued at present, only a very few of which have outstanding long term growth prospects.
If you dont mind me asking sparky how much of RYM do you own. over $100,000?
Great company and well managed but now well overpriced. Agree with Sparky that it's probably c. 20% overvalued. Thought it looked fair value at $4.50-4.75 area but as often happens the market gets carried away with stocks that it loves.
A question for the experienced investors on here.
How do you think RYM will hold up if there is a correction in the market. I am a small time investor and I hold a small amount of shares in RYM (1000 shares purchased at $5.00 ) which if i sold tomorrow would give me a tidy little profit. I wish i brought more at the time and then I would have no problems selling some to realize the profit and still be in a good position to sit through a correction of the market if it happens, but I don't.
Do I sell now and look to come back in at a lower price point or do you believe RYM will hold up through a market correction so I should just hold as it is such a great company with huge potential. At the end of the day it is crystal ball stuff but I am just interested in your opinions on this company if there is a big correction in the market.
Cheers
Sparky, may I just say that I have followed your very thorough and well considered comments on this stock (SUM & PGW as well) for quite a while now. I appreciate them enormously because you have both knowledge and time that I don't have to research these companies in much greater detail than I possibly can. Along with other great posters here that have taught and helped me a lot, I would like to share a little story to say thanks to all of you.
Early last year my 2 teenage daughters had to sell (other party wanted out) a half share in a bach in a highly priced North Island beach holiday area, that they got from their mother and I when we divorced many years ago.
We decided to put 30% of their money in the NZX. Of that we put 50% in RYM, 35% in HNZ and 15% in CEN.
Today we sold half the RYM shares and have sold all the CEN shares since Norman-geddon. We are currently looking at using the receipt of those sales to buy back the half share in the bach, although my daughters who did not really want to invest on the NZX last year, now question whether we should move so much cash into property again :)
They suggest (not overly influenced by Dad) they should put it into SUM, PGW, AIA and SAN so we probably will !
My 17 & 15 year old daughters are pretty happy and would like to say thanks to you STC and all the other posters on here that so freely share their great knowledge. I second that without hesitation !
You are not alone with those thoughts iceman..
We all learn from this site.. From the many contributors.. Sparky ( bless his cotton socks ) just learnt about Coppocks..
The more we all give,..
Well you know the rest of that statement..
I would be completely amiss if I wrote such a complementary post on RYM like I did above and thanking the influential posters for my daughters, without formally mentioning Sauce. He/She more than anyone got my focus on RYM originally (my own shareholding goes back much further than my daughters investment). My apologies for not including Sauce in my thank you message above but that's the risk I ran with even thanking/naming anyone :(
I do not believe (I could be wrong) that any major holders have sold. That would be a game changer....true ?
Has anyone seen the ryman result due out today?
oh apologies its tomorrow
Underlying profit just over $100.2 million. Final dividend 5.4cps
Not highlighted in their announcement but i did the comparison with last years profit announcement and last year operating cashflows improved 27% to $169m and this year they increased 31.4% to $222m !!
Acqusition of new property at Birkenhead Auckland. I am very pleased to see them adding to their Auckland development programme.
Very happy with the result which is at the top end of my expectations.:t_up:
Sound advice-Ive heard that holiday batches have pulled back a bit .If thats the case you may get some change out of your purchase back in.
In terms of shares -things have surged so much that it seems logical that the market is becoming overbought-if thats the case,buying back in after the correction would be good buying[or simply avoid the loss]
I'm sure it will be detailed in their forthcoming annual report. Brief review of financials looks good. No concerns.
https://www.nzx.com/companies/RYM/announcements/236273
Average sale price of units is ~$350,000 so affordability as compared to national average sale price of people's homes is still very good indeed.
Shares look fair value to me at present price of $6.25 and a great long term hold.
Market seems impressed with the result.
Absolutely positively completely normal Ryman result.
The upped build rate now fully flowing through the operating cashflow.
Best Wishes
Paper Tiger
I'm encouraged by Challies' comments that they want to build in Victoria at the same rate as NZ within 5 years.
"The aim is to get a mandate this time next year to roll out in Victoria at the same rate as we do in New Zealand."
Yeap, here's the article for those that missed it this morning
http://www.stuff.co.nz/business/indu...s-on-Melbourne
And MorningStar still have RYM at $4.50 with a recommendation to REDUCE.
Can you believe these guys?
[Classic :laugh:Quote:
QUOTE=SparkyTheClown;407420]Was just thinking that this morning. Moaningstar - the most negative of all analysts in NZ. They are predicting 12% growth for Ryman.
Ryman = village builders
Moaningstar = village idiots.[/QUOTE]
Craigs for what its worth.
Downgrade to hold
Price Increase of price target from $4 to $6
Revised med term build rate forecast from 600RV units/ 325 care beds pa to 750RV units/ 420 care beds
Upgraded price inflation forecast to 6% (was 3%) from FY14-16
Hi Sparky,
What return per year do you hope to make if you purchased RYM shares now if you buy and hold?
Considering a P/E ratio of 23 is quite high. If after 5 years it was valued at only 17-18 times earnings then you would only be making somewhere between 8-9% per year based on growth of EPS hovering around 15%
Why not wait until they become a bit cheaper, more in line with 17-18 PE then you could potentially earn in excess of 17% per year which is almost double what you would be making per year if you bought now.
Because at the end of the day, your annual return is based quite considerably on the price you pay for the stock.
YOur lucky your young as you may be waiting a while. Buyers would enter the market well before the annual return got to 17%!
What is the annual return on property companies? about a 8-10% yield so a 8-9% return for Ryman sounds reasonable. The risk is they don't grow at 17% a year and as a result their P?E ration gets hammered, resulting in a double hit on the shareprice.
When they were priced at 12 PE about 3 years ago the potential returns were well above 17% p/a
History repeats. It doesn't take a genius to figure this out
Where is the margin of safety buying at 23 times earnings?
Plenty of people buying Summerset on a historic PE of over 40 believing that the company will continue to grow quickly, on the other hand as you can see from the link I provided late last week, Ryman have plans to grow their operation in Australia quickly and have recently taken on board a highly talented new Australian director. When you consider that Ryman has grown the company significantly both before and throughout all the years of the GFC they command the respect to deserve a premium rating based on proven performance and a thoroughly proven growth stratagy.
Anyone looking for a material correction in the share price shouldn't hold their breath, in my opinion. This stock is best of breed by a substaintial margin compared to its other unproven competitors, yet one of which trades on nearly twice the multiple, go figure ?
I respectfully disagree with you Sparky, this company is growing its cash flow at a remarkable rate circa 30% for the last two years and its this cash flow that will drive the profit and build rate going forward.
Fact is cash returns almost nothing so if you're not investing in a blue chip proven growth stock like this, where do you put your money to get better proven results, surely not Summerset with its incredible PE ratio and unproven record ??? or are you in the "I'm waiting for a significant pull-back camp" ?
If Ryman can grow their Australian operation and build momentum and brand credibility over there... the stock could easily be double its current price in 5-6years in fact if they can maintain 15% compound growth and the PE stays the same that's exactly where they'll be.
I have no research to verify but have heard a number of times that returns in Aus in this sector are alot less then NZ for whattever reason (subsidies, tax interpretations, structure , margins etc) so is it maybe wrong to suggest return rates will be the same as NZ?