Originally Posted by
SparkyTheClown
Ok, so here's why I like Heartland. I am VERY confident that they will average 15% earnings growth over the next five years. They will probably meet earnings expectations for this year, and I believe will exceed expectations in 2014.
With 4cps in earnings, and using Sparky's back-of-the-envelope valuation method, then 2 x growth x earnings gives me $1.20.
Using my risk-free-rate IV model (a more accurate and tougher analysis tool), I get an intrinsic value of $1.03. I tend to buy when I can see a 50% difference between current price and intrinsic value. Heartland, at 70c, gave me 47%. Near enough is good enough... (or so much for discipline, some might say)
So roughly 50% upside based on 2012 earnings and that 15% growth rate. If they can meet their 2013 earnings, then I would look to re-rate this stock closer to $1.50 by the end of this year/this time next year.
If they declare a dividend, then this has winner written all over it.