*1)around 20% y.o.y growth can be found in a stable s&p 500 stock so money comes out of the risky micro-cap & goes to the "safer" large cap*
The way I calculate S&P 500 earnings they are only going to see about 12% to 15% for the full year. Yes, this quarter should be good, but it is on an easy comparison to last year.
$0.15 would be a fine quarter for VARL. But, as I mentioned before, I am looking for $0.16 to $0.17. This is realistic.
Anyway, my point is not this quarter's earnings or a comparison to the S&P 500 . . . you are ignoring the huge growth potential for wireless related companies. The S&P 500 is collectively nearly out of accounting tricks to turn 5% top line growth into ~12%-%15 bottom line growth. That party is about over.
VARL will probably grow top line in excess of 20% and turn bottom line into 30% or better. AND THIS IS SUSTAINABLE FOR SEVERAL YEARS. The S&P 500 is running into the law of large numbers where earnings growth is concerned. Do you remember IBM in the late 70s? It was projected to grow at 20% PER YEAR to infinity. If that were true, IBM should be larger than the collective S&P 500 now! My point is this, the S&P 500 has a day of reckoning coming soon for numerous reasons, but the fine folks at VARL (especially with their new large line of credit) have numerous reasons why they WILL continue to grow top line in excess of 20%. Now, which investment would you prefer? One that the crowd is chasing, or one that exhibits a solid value and logical growth prospects?
Sorry for that ramble!
*2)isn't the only estimate at .16? The only reason why a miss might be good is that it seems the positive surprises have hurt the most.*
First Call has the September quarter at $0.12. That's Red Chip Review for you. They are also the same crew that has $0.55 for the whole year! Anyway the people over at Zacks do have VARL at $0.16 for the quarter . . . I really do not know who that is . . . Our friend Jim Creamer at EBI Securities had $0.15 last time I spoke with him. Call him at 800-289-5691 for a comprehensive report – or wait a bit, I think he is getting ready to revisit his numbers.
Anyway, I really feel like broadband (see prior posts referring to Netro and Newbridge) and opteoelectric (JDS Uniphase and Lucent) are roaring in addition to strong commercial sales (base-stations). ERICY has really been drawing product from VARL and it is only a matter of time before we see the new $200MM order from Sprint PCS (via ERICY) hit VARL's books (a portion folks, not the whole $200MM!). If handsets continue to build momentum, VARL could easily grow top line 40%+ next year. By the way, the new consensus for worldwide handset sales in the 330MM range. A huge jump from prior estimates.
Does this help? |
