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Technology Stocks : C-Cube
CUBE 36.64-0.5%3:59 PM EST
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To: Humblefrank who wrote (13282)4/10/1997 8:06:00 PM
From: Timoteo   of 50808
 
To all shorts: I am short several stocks right now and thats where I make most of my money. You can read my posts on the VVUS or Short Picks threads. I am long on CUBE. There are a number of very positve signs in the earnings report, all which are negatives for shorting CUBE. Briefly they are:
Price-by any measure the stock is cheap. We're not talking a hype company here or some 100+ PE. How much cheaper can it get?

Earnings: though not a blowout number they hit estimates at a difficult transition time for the company. Earnings are more likely to increase than decrease and right now their forward PE is far below the S+P.

This is exarcerbated by the fact that they are involved in the two hottest fields in consumer electronic, for the next few years at least-DVD and digital tv. Their PE should be twice what it is.

R+D: Big money spent on R+D is bad for shorts. Increases the risks of new product announcements, efficiency gains, etc. Especially considering the business we're talking about here.

Revenue growth: again its relative to the premium of the stock price. In tech, revenue growth comes first before profits, but profits do come-irs the nature of the business.

Downside- tomorrow I would not be surprised to see it drop a bit as momentum players continue to exit, but I would not be surprised to see it move higher by next mid-week. Smart Money-managers are buying this stock now and once they've made their position, the upgrades and repeats will begin. Just watch. It won't drop below 23.
Upside: significant.

Timoteo
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