Jerry:
> Wouldn't a P/E of 30 be more reasonable for this growth company?
> That would make the stock price fair value about 60.
Yes I agree 100%. However I simply can not believe that investors all of a sudden overnight have accepted the high growth Sun will be having. In order for this to happen you need to have a new set of investors into the stock. The same investors, most of whom, for months have been watching the stock (and not neccessarily the company) but not taking any action simply because they were blinded by the Wintel love. Similar to how difficult it is for one to forget about his/her first love, it is difficult for average share holders, most of whom have been in love with Wintel for a long time, to accept the fact that there is a much better alternative for them to rely upon for their investment to grow.
SUNW's P/E will be expanding into the high 20's/low to mid 30's very soon. However at this time I believe, again just in my opinion, the stock is overbought. The market despite the fact that so many brokerage houses and investors claim to have fallen in love with it, I believe it is more of an infatuation than a true love! It will take another quarter of solid revenue growth for the true love to take place to the extend of perhaps even blinding their eyes to just see Sun and not Wintel!
As someone who has been acumulating SUNW shares for over 2 1/2 years and whose number 1 portfolio core holding is SUNW at this time, I do not mind at all for the expansion of SUNW's P/E into 30's to take place at this time. However based on SUNW's 2 1/2 year past pattern and the fact that after reading on as why various analysts all of a sudden are showing their love and interest for SUNW, I believe the market's reason at this time to push for the rise of SUNW price is based on old reasonings and to some extend hype and not neccessarily the justifiable fundamentals. In other words I do not believe, again in my opinion only, that market truly understands why SUNW should deserve a higher P/E multiples. In such a situation the stock's rise in price is due to momentum players and short covering and usually tends to go up very quickly and then it will come down before the justifiable reasons for its rise to take place.
Therefore I believe we may see the high 30's at least once during the next 3 months before seeing the mid to high 50's. The money that went into the stock from $43 to almost $48 has been, in my opinion, momentum money, and the money that went into the stock from $35-$42 was smart money (again IMHO of course). And I base this on the high volume and the price behavior during the $35-$42 range.
Again please note that this is based only on past behavior and I may very well be wrong! I do hope I am wrong because it is really fun to look at your portfolio every night and to see the bottom number goes up practically every day mostly due to SUNW! And again as I said regardless of whether SUNW goes back to the high 30's for a very short period of time (perhaps as short as 5 minutes), before starting an upward trend or keeps on going straight up, a year from now todays prices of $37-$50 will look far far far low!
Someone in one of the past postings called me fanatically bullish with Sunw to the point of delusion! I have to agree with the bullish part but not the delusion part. As investors all we care about is the bottom line percentage gain on our initial $s. However with Sun I can say that not only we all can extremly be happy with the bottom line $s, we can truly be proud to own part of a great phenomenon whose technology and its vision of future has made (and will continue to do so) our world a smaller and friendlier place to live. Anyway, I guess I am now getting into philosophy which is besides the point...
Regards,
Addi Jamshidi |
