From EMLX thread..................
Emulex (EMLX) 57 7/8 +10 1/64: The whole thrust of today's Stock Brief on bargain stocks, is
that quality companies don't stay down forever... Take Emulex (EMLX) for example... The stock
tanked a few weeks back after the company reported sequential revenue growth of "only" 13%...
Heaven forbid! Seriously, when emerging growth companies begin to exhibit a slowing in growth -
even if the resulting growth is still good compared to the overall market - the stocks get punished
as momentum investors move on to greener pastures... And that's what happened at EMLX,
which had posted sequential revenue growth of nearly 30% in the prior two quarters... But now
that impatient, momentum investor has moved on, the stock was left to trade on its fundamentals...
A scary thought for many tech companies, but not for EMLX... As Briefing.com noted in its
bullish Trader's Edge report on 4/19 (when the stock was at 47 1/4), EMLX need make no
apologies for its fundamentals... The company posted a 450% jump in net income last quarter on
a 100% rise in year/year revenues... EMLX is currently projected to earn $0.70 in FY00 and
$0.96 in FY01, resulting in p/e multiples of 82.6x and 60.2x... Not bargain basement levels, but
for a stock expected to grow earnings by an average of 28% over the next 5-years, not
outrageous either... Should be noted that company also trades at a discount to its peers...
Meanwhile, EMLX, the leader in the fast-growing fibre channel market, is busy ramping its
production capacity to meet strong demand... For those that missed it, EMLX reported that its
order backlog in Q3 came in around $27 mln, about 22% higher than last quarter... Basically,
EMLX is a sound company in a hot market that saw its stock severly punished due to a
short-term disappointment... While we doubt the stock will see its old high at 225 1/2 any time
soon, a move to the 80 level is certainly within reach over the next 6- to 9-months. Robert
Walberg, Briefing.com
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