RYM - Ryman Healthcare

[stoploss]

As long as it wasn't your friendly Coop taxi driver - Sparky would have a fit.

hahah, I won't come on here and put any crap up . I stand by my comment

[Beagle]

http://moneychimp.com/articles/valua...ffett_calc.htm

I don't put a lot of stock in intrinsic valuation model calculations because they require you to assume a certain % growth for a certain number of years followed by growth levelling off at another much lower percentage, (referred to by brokers as terminal growth rate), that has to be lower than the RFR in the model.

Doesn't suit Ryman well due to the intrinsic inflation growth built into their business model, i.e. selling units at today's prices and booking profits in due course on all future inflation gains due to the natural unit churn, but when I plugged in the following variables into Buffett's intrisic valuation model:-
Reported EPS of 27.5
Earnings Growth 15% for the next ten years (before levelling out at 3.3% thereafter), this is the truly stupid part of the model in my opinion as I had to use a rate that was lower than the RFR), and with a present 10 year RFR of 3.4% that gave a valuation of $7.58. If one assumes they can keep growing the company's EPS at 15% for the next 15 yearsbefore grwoth levelling out at the aforementioned rate this gives a value of $12.93.

If you use higher RFR's then in my opinion, one should use a higher terminal growth rate as the business model effectivly captures all embedded inflation as part of its growth.

The bottom line for me, (regardless of what valuation methodology or model is used), is Ryman is good value relative to other N.Z. stocks many of whom show little or no growth.

Ther's a reason Ryman has been the biggest wealth creator on the N.Z. market, its the extremly favourable business model.

[Beagle]

That's fine Sparky, I feel you're looking in the rear view mirror too much but you've got the runs on the board which speaks for itself and are still a significant holder. If there's nothing better to do I hear BMW are coming out with a facelifted 5 series in a few months or probably a much wiser investment buy the BMW shares themselves on a forward PE of only 9 http://uk.finance.yahoo.com/q/ks?s=BMW.DE, sorry I digress again, but for others looking for investment returns coming to the market now, all that's really relevant is what's on offer now.... they're faced with cash returns of 3%, short term quality bonds of circa 4-5%, long bonds like Infratil's latest offer at 6.85% that will fall badly if interest rates increase, (in effect almost a de-facto equity risk), Gold or Silver only for the brave, N.Z. or overseas equities, lets not get into art or classic cars or any other dubious investments like coastal property.

Looking at N.Z. equities as we stand right here today, Ryman is the pick of them in my opinion, in a N.Z. market that lets be honest, has an absolute paucity of high quality growth stocks. Anyway I've done too much talking and not enough buying...

[Beagle]

Still not feeling brave enough to try SNK, XRO or DIL? AMM.ASX is looking good across the ditch to me...

I've reached a point in my life where i'm only interested in investing in blue chip stocks with a clearly defined and well proven business model, either on modest undemanding fundamentals or somewhat higher but realstic fundamentals where there's proven long term growth as is the case with Ryman.

Speculative stocks like XRO and the others you've mentioned don't fit my investment criteria but all the best with them.
SKC holds some interest for me but its fully priced at present.
People are fine buying Ryman where they are now provided they have a long term investment view.

[Anonymous]

IF it's another price upgrade (no confirmation as yet but a pretty strong buying pressure so looks likely) then based on the previous upgrades over the last few months I'm not sure it will retract much. Could be wrong though but "this time it's different" works both ways doesnt it?

Yep, First NZ have raised their target Price from $6.90 to $7.65 today.

[Beagle]

Yep, First NZ have raised their target Price from $6.90 to $7.65 today.

Interestingly pretty much lines up with my post # 1325 this morning using Buffett's intrinsic valuation model and my own conservative base case assumptions. Plenty of merit in holding this highly attractive puppy long term.

[scamper]

I was intrigued to learn recently that Ryman's minimum entry age had risen to 70.
Not sure, but I think it was 55 when the company started.
This must be good for the turnover. cheers.

[Snow Leopard]

Yep, First NZ have raised their target Price from $6.90 to $7.65 today.

Where will this insanity end?

[CJ]

Where will this insanity end?

The politically correct term is dementia and looking at the shareprice, people are picking a lot more dementia to come!

[Beagle]

There are extremly favourable demographics for this sector for at least 20 years and yes Dementia is one aspect of that with ~30% of those over 90 expected to suffer from this cruel disease.