Dave Gore's Trades That Make Sense Message Board

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Strategies & Market Trends : Dave Gore's Trades That Make Sense

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To: hotlinktuna who wrote (12327)	9/17/2002 11:40:15 AM
From: Dave Gore	Read Replies (2) of 16631

Guys and Gals -- Just a little something on AKLM I worked up. You all know I am accumulating on significant dips. AKLM's Performance EPS growth was 76% last year Sales growth was 42% last year Forecasted EPS growth this year is 60-75% How many companies have matched that performance in the last year? Why is the Stock Cheap? Mainly the fear of the unknown because traders fear something MUST be wrong. They are waiting for earnings confirmation. But even IF AKLM were to miss earnings by a whopping 50% this year, they would still have a forward PE of 6. PE AKLM = 6 PE ERTS = 57 PE TTWO and THQI = 23 Forward PE AKLM = 3.4 What could raise the stock price UP? Confirmation of earnings on Oct. 14th Confirmation of solid sales during the C.C. Release of 15 new SKU's this quarter Realization that even bad news is already built-into the stock Buyout or other rumors started by the Big Boys when they want to finally run it up again (last run in August was a 110% gain and 40% in one day) Stock buyback announcement Additional and sudden add'l accumulation by Institutions who already own 53% of the company and have had a net inflow of 9M shares. Could the buyout rumors by true? Who knows, but we know MSFT wants to acquire a gaming company, AKLM is cheap and has done very well on sales for the Xbox. But I never buy because of a rumor. For me, it is extra gravy if it happens. Traders vs. Longer Term Investors Should you scalp or daytrade or buy dips and hold? You sure could scalp trade, but just be aware that if you are not "in" the stock, then you will miss the big and sudden runs every time. You would have missed most of the 110% run last month and the run last Friday. After all, T/A does not predict stuff like that. Gaming Forecast Bear Stearns say gaming sales are up 20% year over year and many other feel the Holiday Sales will be strong, partly because families are not travelling as much to destinations like DisneyLand etc and the consumer has been resilient. Also, total consoles owned are way up from last year and will be a big sale item this Holiday season. The average console buyer buys 3 titles right away. "SMARTS & PATIENCE" (not just savvy trading) is needed to be successful Buying dips effectively and patience is key, at least for me. The Power Players know that most people have a need for instant gratification and never hold long enough to reap the big rewards. Most stocks eventually do reach their full Market value and for me the "Upside Potential" easily exceeds the "Downside Risk". (i.e. A currrent PE of 10-15 supports a current price of $3.40 to $5.10 and if they hit FY 2003 consensus of 62 cents, we get $6.20 - $9.30.) Downside risk is probably the strong support at the July gap point of $1.80.

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