No. of Recommendations: 8
Traditional discounted valuation methodologies are frequently compromised by the inherent subjectivity of their underlying assumptions. To mitigate this volatility, I have engineered a framework that bypasses speculative projections entirely.
Amen to the DCF issue.
I too created my own framework, but I admit it's painfully simple.
What multiple are you paying for the "pretty darned sure" average real EPS in the interval 5-10 years from now? That's it. Works for dead end cash cows, ordinary firms, and profitless startups, companies with ongoing dilution or ongoing buybacks, whatever. There are quite a few subtleties built into it, but using it is simple: at a multiple under 12 on that figure, you'll do OK. At under 10, you'll do well.
If you can't come up with a good estimate of the "pretty darned sure" average real EPS in the interval 5-10 years from now, don't buy the stock.
Jim
