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Craig, the answer is that fundamentals include one heck of a lot more stuff than price-earnings ratios, especially when the growth rate is high and the earnings unsettled because of the rapid expansion of demand. To use fundamentals requires monitoring several variables, and comparing to other similar stocks. How do sales per share compare? How about cash flow and percentage of stock price in cash and marketable securities? How about growth in asset value, return on equity, and a host of similar measurements? And then try the really tough stuff, like the value of the patents (which typically doesn't even show up on the books), or the value of skilled management. All these factors go into what I call fundamentals, not just the price-earnings ratio. Without knowing how strong the fundamentals were, a typical investor would have little interest in buying SNDK even in the 30's. By comparing SNDK with other stocks, particularly small technology stocks in rapidly growing markets, the price advantage at current levels is clear. But then again, a lot more people seem interested in stocks like AMZN. |
