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  • sidney_geeder sidney_geeder • May 28, 2004 1:54 PM Flag

    Still seems a bit expensive?

    As a value invester, I'm glad to see the stock in route from its nosebleed 34 (!) highs to where I think it would be a good buy (say 15 to 20). I still think it's pretty good for a bottom-tier company, just a bit overbought considering the the refi boom is over. (Maybe FNF is worth these premium prices but they're the industry leader. ITIC, with its tiny size, is at their mercy unfortunately.)

    Any comments on how this baby got to be so overvalued in the first place? Maybe some folks douted that Greenpain would actually "kick it up a notch"?

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    • pmlljl pmlljl • May 28, 2004 4:48 PM Flag

      sidney geeder: I am in agreement with your analysis for the most part. However, if you value stocks like most people do based on "earnings" and "growth" then it is easy to see how ITIC could have gotten to $35. At earnings of $4.00 per share it had a p/e of about 9. Compare that p/e to the one for RIMM, EBAY, YHOO or the like and ITIC seems modestly priced. Now, I agree with you that the re-fi business has and will continue to cool and ITIC has no black-box contraption like RIMM and its ilk but ITIC's actual record is very impressive, and I for one think it is real, not the Enron, Worldcom cooked books variety. Frankly, I was disappointed that the momentum type investors didn't bid ITIC higher so I could have had an even bigger gain. I guess ITIC is just to small to get any media attention that would suck in those types of speculators.

      I will keep my eye on this stock and if it gets to $15, you will be bidding against me to buy it.

      • 1 Reply to pmlljl
      • sidney_geeder sidney_geeder • May 28, 2004 6:07 PM Flag

        Your point makes a lot of sense. I think the PE difference is because this is a cyclical stock. Car companies (HMC, GM, and co) are another cyclical stock and typicaly trade between 9 times earnings in the up cycle and perhaps 12 times earnings in the down cylce. The reason being that earnings are expected to fall considerably in the off cycle, already in progress in the case of the refi industry.

        The refi market is even more invluenced by cycle than automobiles. Nobody refiances to higher rate!! So if ITIC keeps earnings slippage to 1/2, and earns a fairly impresive $2 per share for the next five years, its PE at $28 per sharewill rise to a hefty 14 at current prices.

        But if the price falls below $20 (and if earnings doesn't fall below $2), this stock may become a bargain.

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ITIC
71.33-0.16(-0.22%)May 24 4:00 PMEDT