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  • JKHY - An Investment You Don't Have To Look At Every Day?

    Jack Henry & Associates, a leader in providing information processing solutions for banks, has seen more hedge funds buying into it of late.

    With a very consistent ROE of 16-18% and annually earnings growth exceeding 14% with the exception of 2008-09, I expect the stock to return in excess of 8% annually, with more upside if it maintains earnings growth into the future. My model assumes a conservative 12.5% earnings growth and future P/E of 18.5x. With these assumptions, the stock is fairly valued now with current and near-term earnings growth accounting for over 70% of current share value.

    If JKHR continues to maintain a higher P/E ratio above 18.5x, which I believe is reasonable, this stock will return in excess of 8% annually and will continue to see its stock value appreciate above its ~$45 valuation. I expect minimal downside to this stock given the conservative assumptions I have taken for future P/E ratio and earnings growth.

    Download the CandidMarkets iPad app to find other investments you don't have to look at every day!

    Fair Value Estimate

    Estimated Future Annualized Returns

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: JKHY
    Apr 09 10:01 AM | Link | Comment!
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