OT: I've re-entered AUO today on the possibility that the media buzz, the stock's momentum (as I understand it), and its maybe possible forward p/e of 10, might attract further speculative interest (and raise the stock price higher).
For the company to have a p/e of 10, based on current price, that'd be about $2.10 per share in earnings, or about 30% on current book. That is asking a lot from assets. Plus, AUO shares its market with the likes of Samsung; imo a ferocious competitor who is quite willing to cut prices and margins and anything else to gain market share.
OTOH, I'd guess at this point the business is so big that new entrants can't compete with the few dominant players. For such a company as AUO in such a growing market (it sure seems clear to me that flat panels are the way to go), a p/e of 10 - if the analysts are right (ha) - is low enough to make a bet on the stock (imo). Back otoh, it's not clear though what technology might prevail or if new entrants can succeed by introducing an even newer technology.
About a decade ago I bought SUNW when its p/e was 10, and for a while (a few years) that worked out okay. Some of my decision to hold a few shares of AUO now is based on my hope that I might see some similar good performance with AUO. (And if so, maybe this time I will be alert enough to see where the exits are before the game is over.) |
