Novell (NOVL) dirt cheap, good buy? Message Board

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Technology Stocks : Novell (NOVL) dirt cheap, good buy?

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To: Spartex who wrote (23376)	8/4/1998 9:13:00 PM
From: DavidD	Read Replies (1) of 42771

IMHO you got it backwards. Yes, there IS a divergence between the big cap high flyers and the smaller caps, but, it is the big caps which will move in line with the smaller ones, not the other way around. (That is not to say some companies will do well - who knows, maybe people will still pay 50 times earnings for MSFT.) Until earnings growth comes back, valuations CAN'T keep getting higher. Stock prices reflect forward estimates of earnings growth. No matter how much new money comes into the market, eventually the valuations must pencil out. That is why I like NOVL. Turnaround situations may get hurt during large sell-offs, but IF they really do turn around, then their stocks will move regardless of the market. The risk here is if NOVL can sell software and return to growth. Unfortunately, timing is a big issue. When money managers and analysts can translate unit shipments into forward estimates of revenue growth, then NOVL stock can move up. Before this year end...?

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