[DDKBF]Wednesday February 7, 1:50 PM ASW Newsletter - 7 Feb 01
By Sharon Lee
As we had pointed out in our newsletter yesterday, the market is finding support at current level. Although the Nasdaq composite index broke a two-session losing streak to rise 21.28 points to 2,664.49, we believe it will see a rough ride when it opens for trading on Wednesday as Ciscos second-quarter earnings of US0.18 per share fell short of analysts' estimates by a penny a share, on revenue of US$6.75 billion. To add salt to the wound was its negative earnings guidance going forward.
On the other hand, the ride may not be all that rough as it has been pretty much discounted by the market. Furthermore, with a soft interest rate environment, the market could be looking forward to an earnings recovery in the latter half of the year.
But in the immediate term, stocks at risk on the local front are Datacraft, as Cisco is its top vendor, as well as contract manufacturers such as Venture Manufacturing and Gul Technologies. We still like Datacraft and would pick up the stock on current pullback.
While there may be some weakness on the technology front, penny stocks will continue to be in play. Hyflux, which is among the top most active today, fell 3.5 cents to S$0.69. This was likely a reaction to the companys statement late yesterday denying that the company would be awarded government water-recycling contract. Nevertheless, its a stock that has performed very well relative to its IPO price of S$0.32 just three weeks ago.
In terms of major corporate developments, stocks to watch out for would be Keppel Capital and hotel operator Raffles Holdings that are due to release their FY00 results after trading hours today.
For those looking for trading ideas, the chart for Clipsal is looking bullish. The share price could test the next resistance at S$3.20. On the other hand, any pullbacks should be restricted to the S$2.75 support ahead of the S$2.70 support.
Last but not the least, a reminder that ECS IPO closed today and will start trading on 9 February 2001. Offered at S$0.66 a share, ECS 10.12x FY2000 PER compares quite favourably with similar companies like CSA, SCS, and CSE, all of which are trading in the teens. ASW recommended a SUBSCRIBE on the stock.
This article was filed 07 February, 2001 01:01 PM |
