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Technology Stocks : Ascend Communications (ASND)
ASND 212.98+1.8%Jan 7 3:59 PM EST
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To: Ron who wrote (8959)8/15/1997 1:32:00 PM
From: Czechsinthemail   of 61433
 
Here is Jubak's discussion of Ascend:

By any measure, Ascend Communications is the riskiest stock among the five I've written about today. But since the stock is down about 45% from its 52-week high of $80.25, it's starting to get into bargain territory even with the extra risk. Ascend, Cisco's networking competitor, is an extremely tough analytical nut to crack. The acquisition of Cascade Communications makes historical comparisons difficult, and in the second quarter Ascend reported a surprising 26-cents-a-share loss that complicates any projections of future earnings. The company recently said in an SEC filing that July sales were weaker than expected. Analysts' estimates for earnings over the next four quarters range from a low of $1.56 a share to a high of $2.23. But the crash in Ascend's stock is almost enough to make up for
all this. I give Ascend a projected price-to-earnings multiple equal
to Cisco's 32 -- not unreasonable, since analysts expect Ascend
to grow faster than Cisco over the next year and five years. Even if
the company earns just $1.56, the stock should be worth $50 in a
year. To compensate for the higher risk in this stock, I'd like to
get a minimum 20% return over a year. That gives me a target
purchase price of $41.66, just about $2 below the stock's closing
price on Wednesday. If Ascend manages to meet the high end of
analysts' expectations, the stock could hit $71.36 in a year, for a
return of 70%. Good downside protection. Great potential return. That's starting to look like a true bargain to me. The more adventurous -- or impatient -- of you might even want to give the market the $2 or $3 extra dollars and buy the stock now.
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