My few observations reading today's posts:
Some deep pessimism around here, which is understandable since the stock has again hit a new 52 week low. However, let's look at the situation objectively: the only fundamental change that has taken place is the lowering of forecast. Given the state of the economy, it shouldn't be a surprise or disappointment that GX is also affected. A couple of slow quarters doesn't mean bankruptcy, really!
Have the original reasons for owning the stock changed substantially just because the company is experiencing slower growth? It is just darn silly for investors to hate the stock at $5 when they love it at $20 four years at its conceptual beginning. For $5 today, you can buy GX with its global network completed, MNC customers, government contracts, capacity leases to other carriers, the marine unit, plus other futuristic broadband uses. Is it a bargain, or looming disaster?
The real hurt is perhaps some of us bought the stock at higher valuations and we never could have foreseen the super star falling to such gutter level. Welcome to the real world of pipe pipers and lemmings! There are three positive remedies for the condition:
(1) Get confident, trade the stock to lower your cost base ...which means buying on days like today... brrrr... having to fight the fear.
(2) Take a rest from this stock, stop watching it daily, and have the optimism that a year from now (or 2, or 3, or...ask Sheldon) there will be a nice profit from this investment.
(3) Research other stocks, invest elsewhere and make money to compensate for the loss here.
Listening to the conference call this morning, it felt good to hear the Q&A same time as analysts did. I think analysts are just as dumb founded on the future of GX as we are, so our guess is just as good as theirs. However, at least we don't have to play self serving games as analysts do with other people's money. As independent investors we have the distinct advantage to zip in and out of stock positions with minimal costs. Pity those investors, dependent on their full service brokers, relegated to buy and hold positions because of costly commissions and the fear of offending their brokers. Imagine the confusion of a Merrill client having bought GX at $30 based on the analyst's BUY rating and $60 target, only to find the rating changed today to a HOLD when the stock is selling at $5.... hello! So, take heart... we're in good hands, OURS!
So, what's the GX story now? It remains a next generation telecom company competing into the space of traditional Ma Bells. It is not immuned to the poor economy and next couple of quarters should see slower growth. It is pruning operational costs and making internal operations more cost efficient. It still has the best growth rate compared to its peers. The telecom sector is currently downright ugly due to over building of fibre, falling prices, and chasm negative sentiment on the sector. It is a growth stock at a value price.. unusual opportunity that comes only once in a while. Unless of course, the tea leaves of fear foretell of worse times looming ahead. In any case, no worries, win some, lose some, just as long as we learn. |
