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Technology Stocks : JDS Uniphase (JDSU)
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To: uu who wrote (21073)8/1/2001 8:39:28 PM
From: sea_biscuit  Read Replies (2) of 24042
 
Addi:

Look at it this way. If, by some magic, this company starts earning $0.10 per share next year and grows its earnings by a generous 40% every year, then at its present price, it is selling at 96 times next year's earnings, 68 times year 2003 earnings, 49 times year 2004 earnings and 35 times year 2005 earnings.

In other words, it is richly valued even after assuming tremendous growth over the next 4 years. Therein lies the rub. And all this is based on the assumption that it does earn $0.10 next year, which as you know is a very tall order.

I don't like to short stocks so my only choices are either be long or be in cash. In the case of this stock, I think it will almost surely underperform T-bill returns over the next 3 or 4 years, even at current prices.
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