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March 2012



Identify Stocks that Chart their Own Course

March 31, 2012 – Comments (1) | RELATED TICKERS: MERC , V , ISRG

One key factor in more accurately assigning price targets to stocks is having a solid basis for revenue and earnings growth. When revenue and earnings growth are largely based on the movement of commodities it can be wildly difficult to use earnings estimates when much of these numbers are a function of the price of inputs or sales booked at a given spot price. For example, MERC is highly levered to pulp prices and their earnings estimates have swung widely over the past couple of years. So too are many of the estimates assigned to gold and silver miners. To summarize, it is much more comforting to perform a valuation on a company with established business fundamentals and competitive moats such as V and ISRG then on a company who relies heavily on a commodity price they have little or no control over.  [more]

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