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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank

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To: Jimbo who wrote (4808)1/17/1998 1:16:00 PM
From: Jenna  Read Replies (3) of 120523
 
PSFT: a very good candidate for earnings play, but....

Year Ago EPS
Current vs. Year Ago Change 56% and the same quarter next year is projected to be 78%
percentile
Price/Book Ratio 20.9 98
Price/Cash Flow Ratio 80.2 97
Price/Sales Ratio 12.2 94

Next 5 years will be enjoying a 50% median growth rate while the whole sector will have an projected growth rate of only 22%

PSFT has had steady upswing in earnings velocity for last 6 quarters.
BUT this has to be watched... a favorite indication for me of whether I consider purchasing rather than watching a company on earnings day is INSIDER RANK... Insider rank for PSFT is 1.. which means insiders are not buying PSFT..and it is in the lowest percentile rank for that category.. The short term technical picture is not that great either.

What you have here is a high growth company with a short/long term technical growth problem. The chart does not portray that growth.. This is not the worst scenario however.. I have seen lots of companies in the doldrums technically come out and shine for an earnings play. What I think is not to buy PSFT the day before.. Find out if earnings will be announced before the open or after the close. I would watch it the day before or day of earnings announcment and try to get some intraday profit on it. IF...it closes at 75% of its intraday range and is up, I could chance taking it home for a gap up.. I did that with VTSS, RDC, SUNW, PKD..and I am doing it with BJS because of what I think is a renewed confidence in earnings having good results on oil sector.
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