Dennis: You're the man.
Thanks for the RAIN info.
Figured the fair value of RAIN by dividing the % increase
in earnings through '97 by the PE and discovered the issue
to be fairly undervalued, trading around 50 some percent of
its full diluted value (pre-split of course).
Dilution is the menace. I regularly make short term
trades on split news and have concluded that stocks, although
they take a nice pop on the news, seldom perform well
subsequently.
Rotech Medical and Zytec are fine examples. Both had
excellent fundamentals and nose-dived post split.
Been comparing the chart of ZTEC to RAIN - marked
similarities here. ZTEC split at 40 or so, fell as low
as 12, and climbed nicely to around twenty with only
one pullback. I think RAIN will perfrom similarly.
Interestingly enough, one could tell ZTEC was bouncing
when the volume dried up and the last few sellers were
shaken off. RAIN, however, fell Friday on more than
500,000 shares, which is heavy for this issue.
Watching real-time quotes, I noticed A/C about even
Friday in absence of buying pressure. I agree this
may not be finished falling, but plan on enjoying
a 6 or 8 point climb when it does.
regards,
frank |
