...reverse the trend of the SMA to up, and then break through the down sloped volume weighted moving average, currently at $25.88. This is the tough one. A lot of volume moved over that price and I think will provide substantial resistance. Pound through several layers of significant resistance and by then you may see an uptrend. I am waiting for Cramer to yell "sell" sometime @ $12 and then jump back in confident that the downtrend is over. Without that, I will probably wait until the Volume weighted moving average is broken going up. After being ranked an "A" in the 95 to 98 range, IBD on Friday ranked ACO at "65=C" Overall Rating. The business seems to be progressing nicely. The price in the stock market moves on investor perceptions. Missing the street"s guesses by a penny has no significance unless you think it portends a recession and is the first of many "misses." Many investors seem to think a recession may have already started! We will only know "in the fullness of time."
I don't use a discount rate for the equity, but rather a discount rate for operations: (value of equity / value of operations) * equity cost of capital + (value of debt / value of operations) * cost of debt capital
In any case, to determine your discount I'd use a risk factor, a market risk premium of 6%, and the risk-free rate after tax.
Amcol's beta according to Yahoo is above 3, so the risk seems very high, I'd give it a factor of 1.5 4% + 6% * 1.5 = 13%
You should use a discount rate of 13% and not 8% in your valuation model.
Take a deep breath guys. It seems like you are becoming obsessed with the pseudoscience of stock metrics. There is NO evidence that past performance of a stock can be correllated with future performance, so therefore the analysis of these metrics (Bollinger, etc.) as a predictor for what will happen in the future is largely regarded as having the value of tarot cards by the finance community. That being said, given that so many people have been duped into believing that these indices are meaningful predictors and are using them to make trading decisions, there likely is an effect in the micro sense (similar to the placebo effect). Investors that are in stocks for the long term need to realize that the stock price is simply the net present value of all future dividends - period. Of course there will be variance in the micro sense, but long term this is the only thing that really matters. My point is that one should not become obsessed with these indices because you might not see the forest for the trees.
Lyph, I have enjoyed your posts. Are you saying there is no evidence technical analysis works (or something even stronger)? If you are commenting on tech analysis, was there some journal article in which technical analysis was studied? Are any of the technical analysis methods sufficiently algorithmic that they can be simulated?
You've made a valid comment re indices and not seeing forests for the trees and yada yada. And if you chose to believe that a stocks price is only the net present value of future dividends then I'd say you're growing quite a grove of trees of your own, long term or not. There are a few long term posters on this site who've provided a lot of insight into this companys success over the years. Rather than being dismissive of some methods Maybe a more positive approach would be more welcomed. Intelligent contribution always is! Good luck! 'Face
Thanks for your input. I have some shares from as low as $16.50 (2 years ago), up to $28 this spring. I almost sold when Cramer did his pump, but greed took over. I listened to the CC and these guys sound like they know what they are doing, so I feel OK with that. My big concern is that Bernanke won't be clever enough to avoid a recession. Between the high cost of oil, increases in mortgage rates, and the usual international problems, we could be in for trouble. Everyone is talking about the housing market collapsing and away we go. Thanks again.