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Amir, USRX has already had a swoon of epic proprotions, down more than
fifty percent while cranking out super eps. However,
after a
rally over the next few days, I expect it to head further to the
downside. Not only are modems a commodity, but Intel will make them
unnecessary some time in the next year or so. USRX won't go belly
up. They have diversified into some nice businesses and are a well
managed company. But rapidly declining modem profit margins are going
to hurt. And companies with profit margins getting whacked in their
cash cow business rarely sell for over 35 times eps. Unlike Micron,
which was a crummy company where the market mistook the cycle for
management brilliance, USRX is simply overpriced and selling high
margin products that have boosted eps. However, I hated it more near
par. This one has a big fan club, so you have to be careful. Only
buy puts on big up days. And, despite today's action, this one will
give you a chance to get in. MB |
