Quote Originally Posted by bull.... View Post
how about because they cheap?

On a dividend discount model which seems appropriate considering everyone wants dividends at the moment

approx values

at a 4% discount rate implies values of

mcy $3.95
mel $4.98
cen $10.01
gne $4.36

on a 3% discount rate

mcy $5.10
mel $6.42
cen $12.91
gne $5.63

on a 2% discount rate

mcy $6.96
mel $8.77
cen $17.63
gne $7.68

think ya get the idea the lower the discount rate goes ( being like say 10yr nz govt bond is actually 1%) the more valuable gentailer dividends become and hence the share price becomes more valuable for the income stream. sort of explains the insatable demand for these cheap stocks in this environment.

depends on your inputs of course but discount rate is a major part of most valuations
Interesting numbers, though obviously - international investors would need to take as well the exchange rate risk into consideration. If times get tough, the NZD might drop like a stone vs major currencies ... which sort of screws up all of the above valuations.