Cognitronics (AMEX: CGN) Message Board

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Technology Stocks : Cognitronics (AMEX: CGN)

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To: INVESTOR who wrote (17)	5/28/1997 10:20:00 PM
From: Neil Kalton	of 142

>>Revenues are rising. I think the cycle is right for this business to move. This company provides voice equipment to Telco's. I believe the regulatory setting is improving so this business should improve.<< Investor, could you please further discuss the "regulatory setting" and its effect on CGN. Is my understanding correct that with deregulation in the telecommunications industry many Telcos are expanding operations and upgrading their systems? If so, as an equipment supplier, how long will this positively effect CGN? In the past CGN has twice risen to the mid to upper teens only to subsequently fall below $5. So timing on this stock seems crucial. I have been trying to set a target price on CGN in an attempt to determine when to get out. So far I have come up with $14-16 by the end of the year as being a reasonable target. This is based on this years projected earnings of roughly $.60 and the industry's average PE of 20-25. Based on CGN's incredible strength this past month, I am highly optimistic that this target will be achieved. What I am wondering about is beyond this year. I have had difficulty setting rough targets for 1998 due to my lack of knowledge on the industry (i.e., how long do these cycles last?).If there is evidence that CGN can grow revenues and earnings over the next couple of years such that the company could earn $1.00+/share then this stock may get into the twenties in 1998. I don't want to miss such a runup since I have substantial holdings (for me) at an average of $5/share. However, given the past history of CGN I am nervous that once it reaches the mid teens it will fall like a rock. Therefore, any thoughts you may have on how long this "cycle", apparently caused by deregulation, will last, would be greatly appreciated. Thanks. -nk

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