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Strategies & Market Trends : Undervalued Stocks = Low P/E to Growth Ratios
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To: Mr. Jones who wrote (27)8/30/1997 11:23:00 AM
From: Robert T. Quasius   of 297
 
I've also noticed that a lot of disk drive companies sell at a substantial PEG discount, and the average P/E of the sector is now around 18 with an average consensus long term growth rate of 23%.

I think that a discount is somewhat justified for disk drive stocks because the business is somewhat cyclical. I am heavy into APM, however, and also own INVX. Using the same principles, I bought QNTM at 20, then sold at 36 when the PEG discount wasn't as great, and found out that four insiders sold significant positions in the upper 20s. I felt that other companies had a greater opportunity for upward movement, so I rotated into a new batch of low PEG stocks.

I might add that an interesting aspect of INVX is that they seem to have the hard disk drive head wire business locked up, so whichever hard disk drive manufacturer is up doesn't matter - they all buy from INVX. This company also has a way of consistantly beating analysts estimates by a wide margin, and is growing rapidly.

Just my two cents.
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