Sam,
IMHO, stocks with rapidly growing earnings are not trading on their trailing PEs. They are trading on their PEG or their runrate. When you have phenomenal sequential momentum like SDLI does, the trailing four quarters are not as important as the here and now, and visibility into the future. If you look at QCOM, I believe you will see that it traded well when it had good sequential momentum and visibility seemed to be improving (due to divestiture of low-ROIC units and the like), but then got destroyed when the sequential momentum stopped and visibility deteriorated. Even at a price of 100, QCOM's trailing PE is much better than it was a year ago, but sequential growth has basically flatlined even as fundamentals have clouded. That, as opposed to a high trailing PE, is what killed the stock, IMHO. In contrast, SDLI has tremendous sequentials in an industry with high visibility, and is a potential acquisition target to boot. |
