Been reflecting on this and future growth prospects, shares v bonds. I think Covid and its variants is a game changer. There's highly likely to be a heck of a lot of elderly folks now absolutely craving the security and support of living in a gated retirement community. The penetration rate of retirement community living is going to grow very quickly indeed from here in the future. Already we have recently seen market evidence of this with SUM having new villages completely sold out even before they're built and long wait lists for other villages, (something they have never experienced before since they listed a decade ago). These same market dynamics will be playing out with demand for OCA villages too.
Our new CEO clearly has his eye on more land acquisitions and I expect the build rate will be scaled up significantly in the years ahead to meet what I think will be rampant demand. On a 7 year view I would be very surprised if we didn't get at least 15% per annum average annual profit growth which if we stick with the current metrics and proximity to the rest of the sector, (closest to NTA and arguably the lowest PE ratio) that should lead to a share price north of $4 seven years from now ($1.59 x 15% growth compounded for 7 years = $4.23)....or you can invest in the bonds and you'll probably get a return after tax of less than the average inflation rate and at the end of the 7 years period the capital you invested is likely to have diminished in value in real inflation adjusted terms.
Further, the average annual dividend rate of the shares over the next 7 years is going to be a lot higher than 3.2% based on an investment at today's share price.
If OCA moves towards the average metrics of the sector in terms of price to NTA the price could be substantially higher than $4 seven years from now, perhaps close to $7.
It has been said that annual compounding growth is the eighth wonder of the world.
That sums up the prospects for shares v bonds as I see them.
Last edited by Beagle; 31-08-2021 at 02:02 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
But the buying down at 1.40’s was amazing! I’ll take another drop any day, can’t believe it was that close to its NTA.
Close to NTA? It fell down to around half of NTA during Covid 2020, bottoming out at $0.38 ... that was amazing! Congratulations to savvy shareholders who got a piece of that.
Hoping like hell that OCA reaches a new all time high today ...only 1 cent away
Previous all time high was $1.60 back in early Februray
SUM was $12.32 then
So in last six months OCA share price gone nowhere .... zilch increase .... while SUM share price up 23%
Things have to change one day don't they?
Yes they do and they will. I'm calling it, this hits $2 sometime in 2022 if not earlier.
Last edited by Beagle; 01-09-2021 at 10:33 AM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
Close to NTA? It fell down to around half of NTA during Covid 2020, bottoming out at $0.38 ... that was amazing! Congratulations to savvy shareholders who got a piece of that.
Yes of course I bought there too, but the discussion was regarding the recent stagnation in SP.
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Originally Posted by winner69
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