With a current market valuation of about $480,000,000 (~$24 x ~20,000,000) shares, I don't look at ALYD as having much further to go from here, especially in the near term. It may double that or even triple it, but I don't see ALYD as being a billion dollar company or ever being a 5-bagger for anyone who got in above $20/share. The ones who have made the stacks of bills are Gruder, insiders and a few early investors and they continue to be net sellers. ALYD has the valuation of a middle-age company but not the sales or the earnings.
My major investment is Applied Magnetics (APM), with sales of $18.80/share, book value of over $9 a share, earnings of $3.90 a share, a 25% annual growth rate projected for next 5 years and having a P/E of < 9. It has only a few more shares out than ALYD and a market capitalization of about $825 million. It has been in business for about 30 years and is on the NYSE. ALYD has projected sales next year (based on quoted $50,000,000) of $2.50 a share (assuming no new shares are issued, which is a tenuous assumption too), a book value that may still be negative and maximum earnings of perhaps $10,000,000 (being extremely generous at 20% of projected sales) and a maximum EPS of about 50 cents for a P/E of > 50. The stock's price still may double in an emotional environment and with appropriate hype by both ALYD and the press, but it seems unlikely to do much more than that and could be far worse or no better than flat until real earnings are reported, especially if the overall market retreats. That is why I am pulling out, although I hope for a temporary lift when it gets to the NASDAQ (a week or so up 10-20% max, perhaps topping at $30). Either Gruder and ALYD made a huge mistake with their earnings projections or their contracts are not going to be as lucrative as reported. Fortunately, for longs, including myself, I suspect it was the former, but I may soon watch from the sidelines instead.
John, of course it is much easier to be optimistic having a basis of 11 1/4 than one above 20. Wishing everyone well and good fortune. |
