Just a reminder of this previous post....given current share price relative when this was first posted....Fussion Investments report
M2 Telecommunications Group Limited (ASX:MTU) M2 is a provider of a full suite of telecommunication services to small and medium enterprises and wholesale customers in Australia and New Zealand. Founded Dec 1999, listed on ASX in 2004 it has grown quickly to become the seventh largest Australian telco.
While the P/E ratio is often overused by investors and of questionable merit it does provide a quick snapshot of the prices investors have been willing to pay. In the case of MTU for example, if we take the mid point of FY10 forecasts, 13.8 cents we can multiple that by 20 for a quick and dirty one year upper target price of $2.8, the current P/E will see a price of around $2.
Those rough figures point to potential capital gains of 60-125%. .....The other reason I like this chart is it quickly tells me whether the share is likely to have ratio expansion on top of the growth opportunity. It is the double bang of expanding multiples and growth that most often leads to significant outperformance over one to two years.
MTU Price at posting:
$1.64 Sentiment: LT Buy Disclosure: Held
