Based on the words of the CEO in an interview in IBD, and I hope that he was telling the truth (or the investors will sue him), he estimated conservatively that sales for this year will be 40 millions and next year, 100 millions. Judging from the ratio of earnings versus sales from last quarter, I guesstimate that the earnings per share for this year will be $0.28 (or PE=120 at stock price of 33) and earnings per share for next year will be $0.68 (or PE=48 at stock price of 33). If this company continues to grow fast, it can continue to trade at premium PE of >100, which means that for next year, this stock should at least double. Also, all the valuations so far are only based on the sales of power management software for laptops and system wizard. But from what I read, this co. is also involved in set-top boxes, cell phones, universal serial bus. With the anticipation of a lot of new products related to set-top boxes this Christmas, this co. may reap in much more revenues. Anyway, I am just guessing all this. Just like IOMG fell on its face when sales in Europe slowed down, this stock may also crash if the anticipated revenues don't materialize. But judging from the large number of institutions that have invested in this co., I am just optimistic that they must have known something that we don't know. Institutions don't normally get in a stock to get out within a few months. Also, the key to play these high performance stock is to get in early to have more room to maneuver if necessary. At price of 33, it's still not too late to get in this stock if you believe that it will reach at least $60 in the near future.
If you read Barron, company like CSCC has even higher PE, ratio of price to sales, ratio of price to book value than SYSF, but yet CSCC stock price still continues to triple/quadruple for the last few years. The reason being is that CSCC is a very well managed co. which still continues to grow considerably.
Mikee. |
