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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank
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To: Jenna who wrote (95017)4/28/2000 4:08:00 AM
From: Jenna  Read Replies (1) of 120523
 
KIDE.. dead in the water for so long..is now up 35% in two sessions. Short interest is very high. Can this be a contrarian indicator and will KIDE continue to move up? One thing I'm glad. I wasn't one of the long term longs who are only now thinking they 'melted' the shorts. I think in this case for the last few months, the shorts came out on top. Watch KIDE tomorrow and perhaps shorts will still have another 'encore'.

excerpted from The Motley Fools April 20......4Kids will keep flogging Pok‚mon both here and overseas -- and Kahn expects a similarly rapid response in Europe and Latin America. It may still generate profits and growth for the company. 4Kids will really show value for investors, though, when it illustrates how well-prepared it is not only to identify the next Pok‚mon but to supplement it with intelligent brands and solid product development for other lines.

"We're committed to staying the course," Kahn told CNNfn. "We think eventually the market will recognize that we're not just a one-property company and that we can sustain this kind of earnings growth that we've seen in the last three years. When that happens, they'll put a valuation on us that we think is appropriate."

That naturally begs the question of whether the company's valuation is appropriate today. By alluding to the last three years, Kahn is perhaps pointing to 40% earnings growth and considering last year's 770% year-over-year growth something of an aberration. Assuming the company grew last year's earnings at 40%, that would put 2000 EPS at about $2.67 and the shares at about an 8x forward earnings multiple.

Seem cheap? Given the amount of work (not much) that went into that earnings estimate it probably should. And with only three years of profitability on the books in the last five, coming up with that seemingly aggressive 40% figure was done pretty much the same way they produce rabbits from hats. Still, for investors who believe in Kahn and his ability to focus his business on more than just its top brand -- and who don't expect another 1999 -- 4Kids may be worth some investigation. The next few sets of financial reports will be telling.
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