Regardless of how "unfair" or "undervalued" you believe a specific stock may be priced at during a specific period of time, it is the market the final arbiter of "value".
Like you, I believe that the determination of value by Mr. Market is most relevant at the time of your entry point. This will make of brake a trade or investment.
Beyond the analysis that you have already performed, there may be a few details that can assist you in determining your final timing as to when to push the "buy" button.
Start with the "insiders". They, in my opinion, are the ones who know the company best.
insiderscores.com
Next...
See what is their "record" (either a buy or sell), after they did what they did.
insiderscores.com
This guy seems to be a good "trader". 6 times out of 9 sells, the stock was lower, for an average return 0.48% (after 3 months) and 25.84 % (after 6 months).
Based on L/T, I do not have a problem with ORCL. Under the current market, who knows, and saying that ORCL will or will not hit $13, or $12, or even $8.00 has nothing to do with the potential value of the company... under a bear market, or worse, during a panic sell-off in a bear market... all bets are off.
So, what is the best strategy ?
That I do not know, because it really depends on one's ability to stand calm in the face of a bear market eating away at your equity.
Perhaps a combination of outright purchases, spread over a period of time, combined with the use of selling LEAP put options, as far as possible... ( i.e Jan. 2004) However, this assumes that ORCL WILL be in operation at the time exercising such option. I am not saying that it won't be, simply making a point about the risk involved.
I mention the use of LEAPS, since it seems (given the current valuation and its downside risk, combined with the premium received as a LEAP seller) that the risk/reward may be on the side of the longs.
LEAP options carry a risk and while you get paid a premium, (as a seller), the risk needs to be evaluated carefully, I am sure you are familiar with both the risk and return of options, so thread lightly using them. They can be useful, particularly in combination with a diversified and well thought out strategy, this you seem to know already...
Just my opinion.
For the record I am long ORCL. |
