Perhaps this is the alternate universe, since high profitability is now a good reason to punish a company's stock, instead of reward it. Take for example the case of Trident Microsystems (NASDAQ: TRID). Last week Trident announced record revenues (+70%) and earnings (+383%), and were at the high end of analysts' estimates. Since then this previously $20 stock has lost 30% of it's value, when it should have gone the other way. Some of this loss can be attributed to competitors' problems: one announced weak earnings, another had an inventory build up. Despite the apparent sympathy exhibited by the stock, Trident appears to be immune from their neighbors' maladies.
In english here's what this means. The stock is down to 13 1/2, and I think any purchase made below 20 is a good thing. Whenever I prognosticate (in public, too) I usually aim for a short term 6-10% net return. In this instance, I expect a whopping 30-100% return this year.
As usual you should consider this newsletter an aid to your due diligence, not a substitute for it. If you'd like to take this up further and begin a business relationship, you can contact me by Email:MDekom@aol.com, or the phone at 404-320-7620.
Cordially,
Martin Dekom
* Spock with a goatee?