I have a bit more to say about my $1.42 valuation. This will be obvious if you understand what 'business cycle average' means. But time to state the obvious.
Assuming my valuation is correct, the chances of Heartland trading at that value on any particular day is very small. If $1.42 is the average, then about half the time the share should be trading above that average and half the time the share should be trading below that average (as a general rule of thumb). Whether it trades above or below depends, where potential shareholders see Heartland going in the next couple of years in relation to the business cycle. A business cycle is not something with a smooth upward and downward progression. So it is not unusual to have lumpy share price movements over time that reflect this.
Just because I wouldn't buy Heartland today at $1.55, that doesn' t mean that I would sell it if I already owned it. For a start, Heartland is a good dividend payer. Sticking Heartland money in a 2% cash account is not a great alternative strategy. And although I regard Heartland as overvalued at present, it is not noticibly more overvalued than the rest of the market. My strategy, if I held Heartland, would be to keep holding. It would only be if the overvaluation became excessive that I would consider selling down. I would add on the upcoming dividend (3.5cps it was last year) to the fair value share price ($1.42 + 20%) and look at lightening my holding if Heartland became 20% overvalued from that figure.
That corresponds to a price of ($1.42 x 1.2) + $0.035 = $1.74
That's the figure I would be selling down from.
SNOOPY