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I drive and I own a car. So, I should be interested in VICOM. Sounds straightforward enough.
I have been looking at it for a year or so but found that the valuation was a bit rich.
During one of the evenings with AK and friends, we had a lively discussion regarding VICOM's future too.
As is the case with any asset, when everybody wants a piece of it, price goes up. VICOM's price skyrocketed not too long ago.
At those prices, its PE ratio was closer to 20x. I wasn't prepared to pay that high a PE ratio for the stock.
It wasn't too long ago that the PE ratio was closer to 15x, I observed.
2014's EPS was 34c. Assuming 5% growth in 2015, EPS could be 35.7c this year.
A 15x PE ratio would give us a fair value of $5.36 or so per share.
Assuming a 50% pay out ratio, we could see a DPS of 18c which would give a dividend yield of 3.35% in the year 2015.
It isn't a sexy proposition, admittedly, especially when we expect risk free rates to rise in future.
Based on technical analysis, during an "Evening with AK and friends", I mentioned that VICOM could retreat to $5.50 a share which is where the share price might find support from a golden ratio (161.8%) if we believe in Fibo lines.
In the meantime, looking at the charts, we see possible supports at $5.82, $5.70 and $5.61. These are possible nibbling points.
This morning, my smallish overnight BUY order was filled.
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