Joshua  Harris profile image JMH18

Joshua Harris

$4.04
UNITED STATES
4/04/08
$895,905.64

56
01/04/17
-25.6%
-10.4%
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Stock Pick by Joshua Harris

SYNA: SYNA trades to an adj. price of $85.50 by 5/20/202

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Posted 11 days ago on 5/16/17

SYNA will go UP
$85.50 on 5/16/17
$55.31 (-1.57% from time of market call)

On 5/16/2017 my #1 Buffett style value investing pick is Synaptics Incorporated (SYNA) on the NASD. It is in the Technology sector and the application software industry and is located in the USA. They basically make touch screen components that go into tablets, smart phones, computers and digital center console displays in cars and trucks. The positives: SYNA has a compound annual growth rate of free cash flow per share of 29.7% over the trailing 10 years period. The R2 on that CAGR is 0.5392 which is low variance but on the more risky side of low variance. As of this writing, SYNA trades at $56.22 per share of common stock. Using a 15% hurdle rate, SYNA trades at a 52.28% discount to the margin of safety price of $117.74. The book value per share over the past 10 years has a 0.7145 correlation to the free cash flow per share and the CAGR of book value per share over this 10 year period is 19.03%. The earnings per share over the past 10 years has a 0.6026 correlation to the free cash flow per share and the CAGR of earnings per share over this 10 year period is 11.73%. Average gross margin over the past 10 years is 41.32%. The average return on equity over the past 10 years is 17.54%. The Current ratio is 2.30 and SYNA is not a serial acquirer. There is a stock buyback program currently in place. There are no accounting irregularities or pending lawsuits at this time. The negatives: Although I would like to see gross margin increasing over this period of time, it is slightly negative at -1.42% CAGR over the past 10 years. Insiders are not buying the stock which is a negative. Over the past 10 years there are 3 negative periods of free cash flow per share where I like to see two or less so that is a slight negative. After reviewing the data I would hazard to imagine that SYNA can grow at a 15% CAGR over the next 5 years given it's discount to the margin of safety price and it's free cash flow per share characteristics. At a current price of $56.22 per share, I would imagine that the stock of SYNA would grow to an adjusted price of $85.50 in 3 years time on 5/16/2020 and an adjusted price of $113.08 in 5 years time on 5/16/2022. Time will tell.

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