Don, no silence from me, and while I am long SNDK right now, if you want to hold it for more than six months without touching it, you may have to contend with a possible trend of "revaluation" in the market. There is, IMHO, a non zero probability that we are in the first stages of a bear market for the semi in general. If indeed the stock prices (not shipments and profits) has peaked, then the main direction may be down, and at the bottom of the cycle, you often find fine companies with earning potential just like that of SNDK selling at only 20 times trailing earnings. If indeed such a period is ahead of us, and using my estimate for the next fiscal year of $1.50, I could see a cycle bottom in SNDK between $20 and $30 (depending when that cycle bottom occurs and how severe is the downside of the cycle). That is how bear markets work unfortunately.
Currently, I believe that we have set the bottom of the current leg of this decline and could look at a potential doubling from the low set today within the next few months. Unfortunately, it will not be a straight line and after probing the $60' or so, I fear that another relapse may occur. This fear, for me, is a good enough reason not to be married to this or any other stock for six months
Zeev |
