Joe,
You know, I think that we (you, me, Paul, and Rich) are thinking along the same lines....About once every year or so, I move away from a regular "spread" portfolio, and make a big bet on just one stock. I too have been picking up SFLX shares....
I feel like a Coyote in west Texas who has spotted a mouse's den backed up next to a wellhead. It seems easy enough to dig out the den and to catch the mouse. So right now I'm studying the angles that I may have missed,"sniffing the air" to discover factors that may make the situation a little more "iffy" than it appears to be.
Let's say that a worst case occurs and SEG shuts down business with all of its parts suppliers including SFLX for six months. With the ramp up of the new program with the Asian manufacturer, then an SEG halt, if it occurs would not really hit with full force on SFLX's bottom line, but be blunted by the phase in of this new program. Too, capital expenditures related to plant expansions are winding down, so a single quarter impact from the Monterrey Plant expansion should not carryover beyond this quarter's report.
Well, with a pullback in the general market we might fall to $9/share and be banging along just barely above book value. Yet per Castleman's recent conversation with wm Sharp of this Thread, SFLX will still carry close to $4/share cash into the next quarter, or 50% of its book value in cash.
Finally SFLX is linked to some remaining good customers in IBM, IOM, QNTM (tape and optical drives), and WDC, even if SEG were by some miracle, to disappear totally from the scene, an event which will not realistically happen, particularly since SEG's order holdback only relates to about 1/2 of its business with SFLX.
So- I think we have the right stock here Joe; the question I believe is of timing as to when a sustained upturn will occur, and whether the stock go a little bit lower first....
Sincerely,
Doug F. |
