September 15, 2006 7:17 AM
The Long Case for Pre-Paid Legal Services
I bought into PPD in 2002 and have owned the stock since. I fully expect it to appreciate to $50 in a couple of years.
From Seeking Alpha:
The stock has been stuck near its current level, around $37, since the beginning of 2005. Where do you think it can go?
BR: The shares currently trade for around 11x trailing earnings, if you adjust for the fact that the identity-theft earnings are temporarily lower because the start-up selling expenses are being expensed immediately. There’s no capital spending, so the earnings translate to free cash flow. Protecting the downside is that they have no debt and they’re using free cash flow to buy back stock. The company has gone from over 24 million shares outstanding to less than 15 million today, which has had a significant effect on EPS growth. I can’t give you a specific target number for the stock price. But if they can really get at the untapped potential I think this product has, the share price will be a multiple of what it is today.
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