Rule #1 Finance Blog

With Investor Phil Town

YOUR HOMEWORK: CRDN

It's great to see Layne profiting already.  His stock is CRDN and he did a good job on the numbers.  And caught a business before it landed a big contract.  Gotta love it when something like that happens out of the blue.  But then again, the fact that the stock had MACD, STOCH and 10 – day MA all green well over a week before the public announcement of the contract is an indication to me that the big guys were smelling something good cooking.

Speaking of cooking, the Phil Town Steakhouse name he mentions below is just coincidental!  First time I rode into Sturgis and saw that big "Phil Town" sign I laughed!  But I do hear it's pretty good.

Now go play.

Phil Town

Layne's Homework:

Hi Phil Town,

I just got through my wedding this weekend and we are going to take a road trip out to the Black Hills, Sturgis and Badlands for a week or so. I noticed online there was a Phil Town Steakhouse in Sturgis and assumed this was your restaurant… If so, is it open?

The post I read was a year old. Any menu favorites? I am definitely a meat and potatoes man… Can't wait to go check it out!

I will finish my email to you about AERTA on the road. I have done lots
of homework, but have had no time to write due to wedding and family
stuff going on. They did change their ticker symbol to AERT on July
3rd. The more I read about this company, the more I like them, the
management and their vision of growth opportunities. I hope to give a
balanced perspective.

By the way, I am up $10/share on CRDN, Ceradyne Inc. I talked about
this company at the book signing. They just landed a $611.7 Million
Army contract over the next five years. This is almost double their
annual sales last year at $368 million. Cool Company, really impressive
CEO! Here is my quick Rule #1 analysis at the time I bought on
06/01/06.

  • PE:  18.56
  • EPS:  2.52
  • EPS Growth rate:  17.5% (analyst projection)
  • Future PE:  35 (2x EPS Growth).  I used 23 as my
    number; this was closer to what it had been trading at historically.

EPS doubles approx 2.5 times/10 yrs. 

2.52 x 2 = 5.04 x 2 = 10.08 x 1.5 = 15.12.

15.12 x 35 PE = 529.2  vs.  15.12 x 23 PE = 347.76

529.2/4 = 132.30  Sticker  vs.  347.76/4 = 86.94 Sticker

132.3/2 = 66.15 MOS vs.  86.94/2 = 43.47 MOS

Bought 333 shares @ 43.32

Today's close:            53.64

$3436.56 Gain 24% increase in value since June 1st…

Your system rocks! I nearly maimed my cat this morning with excitement
when I turned on the computer and watched the chart where it gapped up
on the news…

I would have never been able to do this without RULE #1!

Layne