"Again, I'll continue to ask this question - does anyone now view the closing stock price of JDSU on 7/30 as the top or, do we have a lot farther to go on the upside, a lot farther?"
I'll take you up on this. This stock is way over-valued. Any purchase at this level has, in my not so humble opinion, a substantial degree of down side risk and very little up side potential. Is the 7/30 closing price the top? I'll stick my neck out and write that the close on that day will be approached again, perhaps once or twice. If the current market is in a topping phase, then JDSU will have it's p/e pared down substantially. Of course, in my reckoning, a fifteen percent pull back would be peanuts. How about a 20, 30, 40% or more pull back?
Can't happen? Go back and re-read the Amazon or AOL threads from last winter. Or, check out the action on the computer makers that were rockets in the early 80s. Polaroid? Um.... Nifty fifties? Bowling stocks? Tulips, 1600s?
Um..., look at Dell over the last several years. It was a rocket. It still earns gobbs of money and is the leader. I recall corresponding with a guy last fall when Dell fell off. They guy said, the company is such a gorilla and has an unbeatable business model purchasing the stock on a 20% pull back--even though it was still way over valued--was a sure thing. He got creamed because every time it dropped, he bought more because it is the gorilla, has a lock on the perfect business model, and because the stock was so hot. There is no way to prevent a flight away from speculation and toward fundamentals in JDSU. If that happens, this stock too will get creamed for those who purchase at these levels. Lets face it. This is a "hot stock."
Do not get me wrong. I believe this company probably has a good future. Notice the word is "probably." No one can be certain that this company will have earnings, let alone unusually high earnings, in the future. No one. Furthermore, the price on these earnings rockets depends entirely on continued earnings increases. The first quarter they miss the mega-earnings, Mr. Market can treat them very badly (cf. Dell).
It is fun, however, to watch what I purchased in the low 20s floating so close to the sun. Purchased lately? Better hope the wax does not melt.
Ciao,
David Todtman |
