Kelvin,
A couple of quick comments on CREE, the SOX, and TOY. First, I hope that you don't take this as harassment. I could be wrong, especially in the short term as emotions (technicals) can rule over fundamentals for a short period of time. Most semiconductor stocks are way overvalued now. They are more expensive today than they were at the peak in 2000. CREE on the other hand is fairly reasonably priced because of all the family BS last year, which depressed the price unreasonably. VSH (one that I am short) is trading at a much higher relative valuation than CREE, and much higher than the average semiconductor stock. That doesn't mean that I will be right, but I do think that one has a better chance of making money shorting VSH than a stock like CREE. By the way, I think that VSH is just rising in sympathy with CREE today. It's a very good short at current price, in my opinion.
Stock PE Expected 5yr Growth PEG
VSH 86x 15% 5.8
CREE 33x 28% 1.2
TER 48x 15% 32
TXN 72x 20% 3.6
Sector 30x 14% 2.2
TOY has declining earnings. They will earn less this year than last year. They are going to close a lot of stores (Kids R Us and Toys R Us), which will reduce their sales and earnings in 2004 from 2003. So, here we have a company with a lot of competitive problems, debt downgraded to junk, decelerating earnings, and a credibility problem by reducing guidance twice in a month, and analysts once again have their estimate below the company's latest lowered guidance. Why buy the stock? It isn't worth 14 in my opinion. It's worth 10 to 12 times earnings, which would put the stock at 10 or below. If you believe the analysts, the company will most likely miss their lowered guidance and it's only a matter of time before the stock gets hammered. You even mentioned to me one time that you buy stocks that have increasing estimates and/or earnings, or something to that effect. TOY doesn't fit into that category.
Just my thoughts. Good luck with your TOY long, and I'm really sorry about your CREE short. |
