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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Back around the New Year, there was much concern about TOY and the reaction to consumers complaining about the Hatchimals they purchased as gifts. 5i suggested patience and reiterated their confidence that TOY management would resolve the issues. I thought, therefore, that it might be worth noting the following comments made by the lawyers for the plaintiffs who had filed a class action lawsuit that was withdrawn a could of weeks ago.

"Mark Geragos, the lawyer who voluntarily withdrew the law suit on behalf of the plaintiff added, "Spin Master's proactive response was very successful and, to date, they have either responded to all of the outstanding questions or provided replacements, or refunds to consumers. We applaud Spin Master for the highly effective manner in which they have dealt with their customers. Given these factors, we have decided to voluntarily withdraw our class action."

This speaks highly - again - to the quality of advice we members receive from you. TOY is now trading at all-time highs.

Thanks!

Paul F.
Read Answer Asked by Paul on May 01, 2017
Q: Good day

I will like your assistance on guiding my investment decision. I have read your report on Knight Therapeutics. After Knight has deployed its war chest($736,000,000), you are forecasting earnings per share of $0.59, plus the EPS for the last quarterly report of 0.06$. If earnings grow at 15% per year for the next 5 years, then in 2022, EPS will be :

2017 2018 2019 2020 2021 2022

$0.65 $0.75 $0.86 $0.99 $1.14 $1.31

I am assuming cash is deployed this year, the share count remains constant and investors in 2022 are willing to pay 15 times EPS. If this scenario holds, then in 2022, the share price should trade at around $20 (1.31 X 15). At current price ($10.60), this scenario would result in an annual rate of return for the next five years of 13.1%. Are you comfortable with my scenario or would you change some of my parameters ?

Gilles
Read Answer Asked by Gilles on May 01, 2017