Sounds like you may be nervous!
First, you say that Creative's low was at 4 earlier this year. WRONG. The lowest price Creative traded at in 1997 was 8 5/8. (You have to go back to September of 1996 to find a price of 4 for Creative.)
Second, those prices were when the company was losing money. In the past 12 months, the company has delivered profits in excess of $2 per share.
Third, the company has $5 per share in cash.
Fourth, Creative was at $29 a share just a few months ago.
Fifth, because about 25 percent of their business comes from Asia, the company has already stated that they will be hurt somewhat by that, but that part of it will be buffered by increases in manufacturing efficiency and lower costs.
Sixth, when Sim said Creative would be doing a great job to hit the low end of the earnings forecast, he was setting expectations, and I believe you can be sure that they WILL at least hit the low end. (Don't forget that Creative fell $5 in the days after he made that remark.)
When earnings come out later in January and the market sees that despite all the problems beyond its control that Creative still made the low end of the numbers, the stock will go back to at least the mid-20's.
If you are short, now is a good time to cover your position.
Good luck,
Doug |
