Would you buy COMS for $30 if you were told that $1 was the estimate?
<Assuming COMS make $0.09 this quarter, maybe $0.20 next quarter, hopefully $1.00 for the next four quarters. Would you buy COMS for $30 if you were told that will be the new estimate?>
Simple answer: YES!
Reason: Well, if you take a value approach to investing (which I do) and you historically look at the growth rate of COMS, you will see that it has been greater than 30% per year. Also you will notice that over a 10 year history they had a bad year now and then, but evenutally come back to average better than 30% growth. A good rule of thumb to use when taking a value approach is to buy stocks that are selling at a PE at or below their growth rate. So, if I was told that the number was going to be $1.00, the price is at $30 and the growth rate is > 30%, I would definitely feel it is a buy. Don't forget to take into acount that in the past the company has encountered difficulties and management has always been able to recover to bring the growth back to the 30% level. Management hasn't changed, they have always been able to adapt in the past. Of course, past performance is not indicative of future performance, but that is where the risk factor comes in. Sure, the shorts may be right for the next few weeks/months, but networking is here to stay, and in the long run, my money says COMS will come back fighting and recoup its lost ground.
Of course this is all IMHO. Time (future) will reveal who wins and loses. Time (past) can only give a picture of what may come. |
