Undervalued Stocks = Low P/E to Growth Ratios Message Board

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Strategies & Market Trends : Undervalued Stocks = Low P/E to Growth Ratios

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To: John Liu who wrote (1)	8/30/1997 11:03:00 AM
From: Robert T. Quasius	of 297

I also look for low P/E relative to growth rate, and APM is currently my largest holding. The street beat this stock down when they tried to acquire RDRT unsuccessfully. The assumption was that they needed RDRT's newer disk head technology. The rumor is that APM is behind in the newer magneto resistive (MR) disk drive head technology. The truth is that APM is very strong in the current thin film inductive (TFI) head technology, and also produces the newer MR heads. Another truth is that RDRT transitioned to MR earlier because their TFI technology wasn't very good. MR is more expensive than TFI, and is better suited to larger disk drives and portable applications. Some disk drive companies in the past have gotten creamed by transitioning to newer, lower yield technologies when the existing technology was still more competitive. The word about APM is slowly filtering out, and this stock will likely take off like a rocket in the next 2-3 months. The stock is still very undervalued relative to P/Es and growth rates. The current P/E is also about to drop because the fiscal year ends in September, and estimates for FY 98 are much higher than FY97. WDC just announced their first hard disk drives with MR technology, and guess what? They're only going to use MR for larger drives or notebook computer drives, and say that TFI will be their primary technology for another year or two. They also said that APM (among others) would be one of their principal head suppliers. Since WDC is doing extremely well selling disk drives with TFI technology, it stands to reason that their primary TFI head supplier should also do very well. Just my two cents.

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