Don, I have a hunch on FSII. But before I explain myself let me put the disclaimer in that I have no sound basis for this argument expecpt for past experience.
I believe that FSI will start moving higher in the short term. I know I have been bearish on the stock, which has been part emotion and part fundamentals. Anyway, I am not going to sell my shares because I believe the stock will head higher. The reason is, I believe, that since Piper just upgraded the stock when it was trading at $15, it leaves room for the stock to move forward on "Dog and Pony" shows, or brokers pushing the stock. Since Piper is local to FSi, I believe that the brokers will be pushing this upgrade heavily. Additionally, I believe it coinsides well with the fact that the stock really has been lackluster for a while. If nothing else a broker has a good story to tell: Earnings forcast for next year is very conservative, sector is picking up, stock has been at a low for a while, good management, quality products, the attitude of "The worst is behind us now", and so on.
I looked back at my charts and saw that FSI was trading at $38 almost 2 years ago now. If you look at what earnings were for 1996, they were $1.20. With a share price of $38, that translates to a PE of around 30. Using that same PE in a sector that is supposed to pick up, sold heavily by brokers, and supposedly the "Worst is Behind Us" attitude, that would leave me with a stock price of $24 a share based on PE of 30 and earnings of $.80.
Like I said I could just be blowing a lot of smoke. But, based on todays activity of the stock, Lucky or not, I could be right. I have bought more shares based on my theory (As well as other reasons).
Maybe this stock will see $20-$25 in the next six months after all.
Additionally, let me put this disclaimer in as well, I am not showing this bullish position based on what happened today. I have been thinking about this scenerio for a while. When Piper but the buy out, that was the icing on the cake. |
