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Advance America, Cash Advance Centers Inc. Message Board

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  • astral_tsar astral_tsar Nov 14, 2008 11:53 AM Flag

    The Future

    divi_lovin,

    Thanks for adding that, I think those are good points. The even gloomier case could happen. And I agree AEA is a gamble. Not a core holding.

    But I think reasonable handicapping on the gamble comes out a lot higher than the current price per share.

    Even if there are equal chances of getting $10, $5, $2.50 and $0. The average is $17.50/4 or about $4.38. Almost no matter what kind of numbers I stick in, I can't make the handicapping come out anywhere in the $1.80 to $3 trading range that it's been sitting in lately.

    Meanwhile QCCO seems to be sitting somewhere between the "happy" and "medium" scenarios, and they have a similar record in the same business. One way or another I think that gap probably will close up a lot.

    The funny thing is, if AEA does zoom up to $4-$5 one of these weeks, then suddenly lots of folks will want in at that price. I won't have to tell the story then ... but the easy double will be gone.

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    • So, yeah, the deck has four kinds of card, one says $10, one says $5, one says $2.50, one says $0. Nobody wants to get stuck with the card that says $0 on it.

      But when the stock is $1.75, the deck of cards in those sellers' minds goes like this: one $10, one $5, one $2.50 and SEVEN $0s. Ten cards, $17.50/10 = $1.75.

      Is that true, 70% chance of a total loss? Before they cut the dividend I would have said no way. But now ... maybe so.