I am not buying this right now in real life -- the potential downside on the chart, with no real support for a couple of more points down, is too great. Fading issues falling on heavy volume is not permitted by my trading discipline. The PE is still near 40, too -- not exactly a value buy! But I'm straining at the bit.
If you look at the three day chart, you will see what looks like a consolidation happening late Friday afternoon. My belief is that the trading money has been stopped out and the swing investors flushed out, and a fade into the recent low is not a bad idea. But it is still dangerous -- there was some sell activity earlier on Friday -- and another holder might decide to dump some shares, triggering more stops etc.
Another way of saying this is that the issue is becoming oversold. I just don't see a lot of fund managers reacting to the earnings announcement this late -- the ones who were going to dump it should have done so by now.
Now the good news. As I posted previously, this company's product ROCKS. My ISP (Bellsouth) replaced my Alcatel modem with an external Westell Wirespeed and it's the greatest thing since cut bread. This is for DSL modems what Iomega was for portable storage. They basically put a dedicated one-computer router between your port (either Ethernet or USB) and the ISP node. You can thus pull up your router on your browser window, just like a web page, if your DSL resets, and reconnect in two seconds.
Peter Lynch, who did okay in the stock market, told us to buy what we love, and I love my Westell modem.
The stock tanked, reportedly, because the market was expecting an announcement about a new relationship with SBC. (Westell's modem sales volume comes from its relationship with two big carriers, BLS and VZ. Adding a third would be a prelude to significant revenue gain.) From personal experience, it cuts the carrier's customer service costs enormously. I simply do not see how some other big DSL carriers will NOT pick up Westell.
Finally, Westell's big competitor (Alcatel) is French, and I hate to admit it, but I love to see their fannies getting kicked by Westell's superior reliability and design. I will add this to my RL portfolio as soon as I see solid consolidation on the chart. I don't want to miss the potential gap up when Westell announces their next major contract, which will come without warning, as the company is fairly cautious about giving guidance until a deal is cemented. Or perhaps we will see the news of a new major contract reflected in the chart, as insider leaks accelerate acquisition. |
