I'm always just jumping in and out of CREAF...I like CREAF because of its very low PE ratio. I'm worried about holding a long position for very long because:
1. Future of DVD is still questionable. If there is a big future for DVD, then CREAF is positioned well for it...but it will likely degrade quickly to become a low-margin market, just like CD-ROM drives. If DVD is a flop, CREAF will be in trouble.
(If Microsoft begins shipping their products in DVD format, look out above! They will make or break the DVD market).
2. CREAF was being pushed into the high-end of the soundcard market. High-end is shrinking. Most systems come with low-end sound cards, where margins are extremely small. CREAF has positioned itself for the low-end market now, but whether volume can make up for the loss in the high-end is still questionable (e.g. disk drive industry is in shambles now...very high volumes but no profit).
3. Sales show very little growth from same quarter last year (2.3% increase, which I consider to be flat). If DVD fails to take off soon, Asia problems or no Asia problems, CREAF will remain stagnant, and stock could fall considerably and stay there.
I might buy back if CREAF gets into an oversold condition again, but will likely sell quickly. If Microsoft begins shipping software on DVD, I'll buy and hold for big profits.
Sam |
