• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 16. Value Investing: The Process > Step 3: Target Price Ranges

Step 3: Target Price Ranges

The implied growth calculation tells you there's money to be made owning ATI shares if the company gets its act together and returns to profitability. Now it's time to get down to brass tacks and establish viable buy and sell target price ranges.

Calculating target prices starts with the assumption that the company will return to profitability at some point. Call that the recovery year. Then calculate target prices for the date when the recovery year's results are reported. For instance, the recovery date would be early 2005 if you think the company will return to profitability in its fiscal year ending December 2004. It's not a big disaster if the company recovers a year later than you expect. That event just pushes the date back when you can take profits, but it doesn't materially affect the result.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint