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Strategies & Market Trends : Value Investing
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To: bruwin who wrote (66473)2/9/2021 6:51:26 AM
From: JohnyP1 Recommendation  Read Replies (1) of 78719
 
SIMO is in a cyclical business. Cyclicals can go from unprofitability in bad years to extremely profitable at the top of the cycle. The company has orders of more than 700million this year and the constraint is manufacturing capacity. In my view there is some margin of safety even if they miss their projections by a bit.
As for the cyclicality of the business, here you can see from 2011-2014 very low growth and then 2014-2016 doubling. So the argument of 1,2% growth over 5 years does not say all the story for a cyclical.

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