Alejandro, that was a good question and I think Dale pegged it correctly. It seems that the same question is playing on the minds of many people that are considering Franklin.
My best response to your question is based on a different point of view.
I partake in the stock market via two avenues of thought, one as a trader and other as an investor. Sometimes the two intercept each other. In other words there are stocks that my original intention is to trade, then upon further diligence and familiarity I become an investor over an extended period of time. There are also those that I plan to trade, then things go awry and I end up locked in for an extended period and become an investor against my will. ggggg And vis a vis.
To me investing or trading is geared around one aspect only, risk management. As you search through the universe of stocks to choose from, one thing is apparent, they all, or almost all, have wide 52 week high low's, better known as trading ranges. Yet as you do your homework, you will notice many are fundamentally stronger then they were a year ago, yet they are bouncing along the floor of their 52 week charts.
Market forces, a missed quarter of lower earnings expectations, a seasonal hiccup, who knows. The big thing is to investigate to make sure there isn't a terminal problem that caused the price action, then assess the risk vs. value comparison.
If, after a thourough investigation you find out that the company is stronger then it ever was, yet is within the bottom 1/3 of it's 52 week trading pattern, you have eliminated about 2/3rds of the risk. Identifying the reasons for the low can be frustrating, and in some cases you will never come across a definitive answer that sits well.
Usually in a case like that, you have to write it off to "uncertainty."
The one thing that the street doesn't like, is "uncertainty."
When you look at Franklin, I think this "uncertainty" is personified.
There are many "unknown" factors to evaluate, all of which have given an air of "uncertainty" to Franklin. In question, to name a few are the completion date to the S-1, the effects of the warrants being excerised, the IPO'ng of FNET (price and timeline), the relationships with previously announced alliances, the numbers, etc.
So, to look at Franklin and wonder why the price is down, I don't think you have to look past "uncertainty" for an answer.
But, shake your head, rub your eyes, open your mind, and allow room for little common sense and a different perception appears. Look at the big picture, fundamentals. Make a comparison of fundamentals over the past two years, then make a comparative valuation of stock prices over that same period. Erase from your mind who they are, their name, or any static from the peanut gallery (pro or con). Only look at what you would have owned two years ago, vs today. What you will quickly begin to realize is that today you own a company, a viable company, with new products, services, alliances, and a tremendous future. But even that is subjective, and is all in the eye of the beholder. The trick is to train your eye, by knowing the industry, knowing the sector, and having a feel for where FTEL will fit. The more you know, the less "uncertainty" you are going to experience. The hell with the street, if you are right, you are right, it is only a matter of time till your proven right. And that will come in the form of earnings reports. First you will see big percentage jumps in revenue, and hopefully within two quarters after, earnings jump to match.
Again, all you can do is arm yourself with knowledge, and that knowledge puts you in front of the pack. A day, a week, a month, a quarter, who cares? The object is to be there before the sharks show up.
Timing is everything!
But now go back to what I was saying earlier, regarding risk, 52 week high/low's, and fundamentals.
With Franklin trading at approximately 60% off it's highs, compare that with a few key factors that I always look at in gauging the timing of a buy. The foremost indicator to any companies progress is to look at their recent hiring. COMPANIES DO NOT EXPAND THEIR WORKFORCE IN A BUSINESS DOWNTURN, ONLY IN AN UPTURN. Beat that into your head a few times. Then look into why they have been expanding their workforce by a factor of five+. Franklin is busy filling orders, introducing new products, and landing new business. Yet they are trading at the bottom third of their 52 week trading range.
Hello! Hello! Anybody home?
Will it go lower?
My answer is: I HOPE SO!
Reason: Guess!
RB |
