I can tell you now.
Not the date or price, but the conditions.
Assuming the fundamentals don't change (no debt, steady EPS and revenue growth, steady expansion of non-commodity product line), I will begin looking again when the stock hits a PE of 20. Then, I will watch till it forms a base lasting at least a month, bouncing off a support level two or three times, and then buy.
In 3 of the last 4 years, the stock bottomed at a PE of 14 or 15 (using trailing earnings). It is an unusually volatile stock, given its steady earnings history. For the last 13 quarters, the EPS have been 17,18,20,23,23,24,25,26,26,28,31. Meanwhile, the stock has gone from 10 to 25 to 13 to 23 to16 to 34.
I would have been happy continuing to hold this stock, but I want the money for KLAC and BSX. Those stocks have prospects at least as good as WPI, but they are out of favor, and will easily triple in the next three years, from their current low valuations. From current levels, I would expect WPI (the stock) to grow only as fast as its EPS does. There is little room for PE expansion. I like to buy stocks when both the PE and EPS have potential for growing.
Actually, I still hold it, because my limit sell price of 33.5 hasn't been reached. If it doesn't sell in the next few days, I'll convert it to a market sell order, as long as I get at least 30. |
