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

    Still seems a bit expensive?

    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.

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    • 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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