My short-term price target on CHCI is $3.00 by year end. I get to that by assuming the company can reach it's estimate of around $150 million in sales by 2015, which would generate around $0.60 per in EPS. Applying a terminal 10X multiple to that and discounting back at 30% annually to account for the high risk here yields a a fair price for the equity of around $3.
CHCI could easily hit $3.00 within a month or two. I think it can hit $5 or 6 before June. What could make that happen?
1. If Comstock closed six to tem more homes in the last few days of March, so their guidence for Q1 is met, it suggest their whole year guidence will be met.
2. If Comstock announces earlier than usual Q2 report day, and/or announce a conference call first time in a long long time....
3. Another leg up move on DC home prices.....
Recently, I have been reading annual reports of last 10 years starting 2004. In a normal housing market, their gross margin is about 25 percent. So multiply that to the guidence number.
I think it's doubtful they will have 25% gross margins again in our lifetime, but I guess anything can happen depending on how hot the real estate market becomes. I tend to think that real estate is on a 5-year bull run in the US now, so of course CHCI will be alot higher in a few years from now. But, honestly I have no idea, just trying to be conservative in price targets. If you use higher margins the numbers can get very high, quite quickly.