At some point ya just have to say "this is insane" and buy, even though it sounds stupid because tomorrow will probably be another 5+% down.
I did that today with RTEC, buying at $2.75 and $2.58.
Knowing that:
1. the balance sheet is very strong.
Per share numbers: cash ~$2.41 and no debt.
Working capital ~$5.73.
Tangible net equity ~$6.03.
2. the management team is solid, straight shooters.
3. the products are #1 or #2 in each segment they're in.
Even if RTEC loses $1 per share (in TANGIBLE equity) over the next few "Q"'s, the stock price is insanely cheap relative to that point in time.
I think RTEC is a survivor, and whenever the next cycle comes it will be many times the current price. For example, if RTEC can post $.15 in a "Q"'s earnings (yearly of $.60) sometime in 2010, and that priced at a PE of 15 = a $9 share price. Of course the stock will run 6 months ahead of that - or more!
From the current share price, I think RTEC will be among the top percentage gainers between here and the next cycle peak (whenever the heck that comes)!
This board is dead, but hopefully I'm not alone in my thinking. ;-)
At this point in the market I'm buying only stocks with fantastic balance sheets that can survive a hellish next year, problems that are temporary economic rather than company specific, and that have lower than average stock price relative to tangible assets, and higher than average appreciation potential. RTEC qualifies. If the entire economic world goes to crap, these are the kind of ships that I'd want to sink with.
Good luck to all.
|
