I mentioned RMKR to you, dear readers at $6 saying it was undervalued and ripe for the picking. Sidoti & Co. LLC came out today and set a $10 target which is easy to figure out. By my calculations actually it’s $10.50.
Here is the magic formula.
Next years earnings - this years earnings / this years earnings * 100 = % of growth.
Now take that growth % and multiply by 2 which is what institutional investors are willing to pay. This gives you what the current P/E ratio should be. Now go back to the summary of the stock. Compare the P/E. If the current P/E is even or below, then the stock is likely a buy in which case you want to go to the fundamentals and management and make sure you like what you see.
Next take that P/E you calculated and multiply by the current EPS (earnings per share) which gives you the price target the stock should be and hence where you should or could sell it at if you buy.
Pretty simple huh?
It’s not too late to get in this stock which could hit that $10 target by year’s end. I try not to look for trades that short but there it is.
