Trading at cash value and at 0.4x sales it's more like a buying opportunity IMO.
Cash value? Well, that's true, but they are also trading at debt value. All the cash came from issuing debt. Every quarter the cash balance decline. The debt just stays there. Eventually the debt comes due, and when the cash isn't sufficient to pay the debt, bankruptcy is declared. You know how this works, right?
As for 0.4x sales, what is the value of $1 of sales if it results in 15 cents of losses?
Every day is a buying opportunity, just not a good investment opportunity, since they are eventually going bankrupt and the equity is on its way to zero. I won't get another chance to buy LU, because I won't buy it while they are losing money, have a huge debt load and are in a declining industry with lots of competitors. If that sounds like a good investment opportunity to you, go ahead, but you might want to see a doctor first.
Elroy |
