INFO FOR NEWBIES: Outer, I am sure the drop is not due to any bad news because Reg. FD prevents anyone, including analysts, from knowing about anything good or bad before the rest of us hear about it. In speaking with Mr. Kwok late Friday, he reassured me that they had not released any negative news. Beyond that, of course, he couldn't tell me much per Reg FD.
I think the stock price drop is more likely due to their relatively low shares O/S and the volatility that can come from that. Translation: while I believe the Fair Market Value of this stock is around $50** (PE of 25 based on FY2001 earnings), this could go down to 20, or... up to 60+ in a heartbeat if fund managers start buying and the bias changes.
This market is very cruel if you are on the wrong side. Certain people try to create "panic selling" and then "panic buying". They want the little guy to sell low and buy high. Right now there is a downward bias; if the Feds cut rates and the Market decides enough is enough stocks like ELNT can be the first to come back. Let's face it, they are fundamentally a lot more sound than most and in a very good sector (SEE BELOW); all we need is buyers. I think most big buyers are staying away (especially Fund Mgrs.) because they would rather see things more stabilized before stepping back in. I think most believe the stock is fundamentally oversold, but they know how cruel this market can be, especially in volatile stocks.
I often try to figure out risks and fair market value in deciding whether to buy a stock or not. I failed to properly take the volatility of this stock into account, however. I should have. But longer term, the biggest question is "Where does the true value of the stock price belong?"
Most would say certainly well below the annual high of 122 and well above the annual low of 13. But where? That's what everyone has to answer for themselves. Of course the stock could easily be driven lower before it goes higher. No one knows for sure. Then it could easily be driven higher than it deserves to be again. I watched TQNT semiconductor run up inexplicably from the high 30's to 62 plus (right near its annual high) in the last couple weeks when many stocks were falling and then it tanked again.
Volatility is the name of the game in this market. To many it probably seems that when they buy, their stock immediately goes down and when they sell, it almost immediately goes up.
ELANTEC BACKGROUND INFO
They are in a number of very hot sectors with over 150 unique products for flat panel dispays, Digital cameras, DVD's, optical storage, DSL, CD-R/W, etc.
Quote from their web site: elantec.com
"The Company targets fast growth commercial
markets in which advances in digital integrated circuit technology drive an
increasing demand for high speed, high precision and low power
consumption analog circuits.
The Company's strategy is to provide timely and effective solutions. This
is achieved through in-depth market knowledge, advanced technologies,
design expertise, and superior, applications support.
Markets
Elantec Semiconductor targets four fast growth commercial markets
where we believe there is an increasing demand for analog solutions.
These markets are video, integrated DC:DC converters, optical storage
and XDSL. We offer a family of Standard Products used in more than one
of these markets, and Application Specific Standard Products (ASSPs)
used in one specific market and designed to address a number of
common component requirements. This approach provides more
effective solutions for electronic systems designers."
PS-- Earnings report Jan. 16. Kind of on the early side.
** assumes they roughly meet or beat earnings for FY2001.
Good luck, All. |
