I'd like to think that STM tanked because of the lack of knowledge people have about the company, and it has had a huge run-up since the beginning of the year. Also, people may be afraid that Thompson CSFs sale of 17% of STM may somehow affect the share price, but all of that stock will almost certaintly be privately placed.
On the surface, STM seems overpriced based on trailing earnings, but FY '98 earnings are projected to rise by 55%. It is also interesting that of the 11 analysts that follow STM that 10 have it as a buy and 1 has it as a strong Sell?????
Earnings come out on 9 Sept. and I would bet that they have an upside earnings surprise. The CEO had stated early in the year that the first and second quarters would disappoint, but things would pick up in the third and fourth quarters.
With STMs diversity, world markets, strategic alliances and new products, I would use any further weakness as an opportunity to buy and make it a core holding. They have socked a lot of money into R&D and are heavily into MPEG compression technology for DVD, DSS, etc. Their 10K reads like a "who's who" of Fortune 500 companies. They sell to the Automotive, Computer, Telecommunications, Consumer, Industrial and Manufacturing Industries. I guess it is easy to see that I am jazzed about the company.
Mark |
