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Technology Stocks : Open Text

OTEX 34.28

-1.5%

Nov 13 3:59 PM EST

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To: White Shoes who wrote (474)	3/29/1997 4:10:00 AM
From: Sirius Pointer	of 1195

It will certainly be more than $30 when it appears to be the market leader to everyone. Before I elaborate further on my idea, I'd like to thank you and others in this thread for all the information and thoughts contributed. Among the threads I have read in TechStocks, this thread have the best discussions. My point was that it shouldn't be priced as the future market leader rather than delaying the investment until it appears to be the leader. Since stock price fluctuates a lot, it tends to be undervalued or overvalued one time or the other, especially for a company with rapidly growing revenues. So even if I overemphasize the risks, it is still possible a stock gets undervalued to match my valuation. On the other hand, a stock price may continue staying above my valuation for an extended period even I've already applied a high valuation. For example, Documentum in the entire 1996 or PeopleSoft for the past two years would fit into this scenario. As a company's business develops and the story gets better, it should be valued higher. The higher stock price valuation is well justified for the reduced risks. Since a company's valuation is adjusted to reflect its fundamentals and risks. So it's also likely that I will purchase OTEXF later even at the price higher than today's as its business improves. But the stock price of OTEXF appears to be a bit higher to me at this moment under the current market condition. If we assume DCTM has the same future growth rate and future profitability as OTEXF, the hammered stock prices of DCTM in the past two weeks will translate into $5 ~ $6 of OTEXF. (The stock price is translated based on the sales/share ratio in both DCTM and OTEXF.) The appropriate premium deserved for OTEXF would depend on how highly one values Open Text. It just seems high to me with over 30% of the premium. It may be DCTM is undervalued here rather than OTEXF is overvalued. But there are also other stocks relative cheaper than OTEXF, yet with lower risks and the simlar promising prospects.

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