[ Why Buy Now? ]
You said:
Mike Winn, only a month ago, you could have bought all the ORFR you wanted for under $10. Instead, you chose to wait until positive press coverage in Motley Fool and IBD temporarily pushed the price into the mid 20s. You got the same stock at 2.5 times the price! Why buy now? Do you expect that further press coverage will draw in greater fools? Who is it that can buy all they want now at $25, but will choose to wait and pay you $50 next quarter?
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Mr Fred Puppet, first of all, I just discover this company through the article in the IBD and I wish I knew this co. when the stock was still at 10. But look at it this way: wouldn't you buy Dell today at 85 3/8 since a year ago it was only at 14 7/8 and its current PE = 44? Or wouldn't you buy MSFT at 138 today because a year ago, it was at 60 and its current PE = 53? Good companies will continue to grow, don't you think so?
'97 EPS for ORFR is estimated conservatively at $0.65/share, that will give a PE of 38. In the first half of 97, ORFR has already earned $0.35/share. So at a yearly growth rate of 176%, ORFR can very possibly get a revenue of $0.80/share for '97, that will give a PE of 31 at today price. If we assign to ORFR a PE of 50 like its peers, don't you think that ORFR could go to at least to 40 by year end?
For comparison, APEX, a maker of server switch and recent IPO, is currently trading at 31 3/4 with a PE of 77. It started trading in March '97 at around 9 and went down as low as 6 7/8 at one time.
PWAV, a maker of cellular phone components and also recent IPO, is currently trading at 39 with a PE of 60, EPS = 0.64. It started trading in December '96 at around 12.
So Fred, who are all those fools who buy APEX and PWAV at those astronomical prices?
Somebody just posted today and said that ORFR is not Rambus. Of course not, ORFR has income while Rambus just promises to be profitable next year. RMBS is now trading at 82 with a PE of infinity while ORFR is trading at 25 with a PE of 31-38.
I don't care what the stock will behave in the short term but to me, this stock is worth keeping until it gets at least in the mid 30 by year end. |
