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Technology Stocks : Nam Tai Elec. (NTAI)
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To: Joe Dancy who wrote (1240)3/15/1998 11:42:00 AM
From: DanD   of 1696
 
Joe,
I have loaded up on warrants based on the very same reasoning you have just made. This stock can show really good volatility and has run
up in the past and probably will again. That is the key factor in considering the warrants since they are nothing more than options with a cap.
The stock PE of six is not quite accurate due to the one time gains, but it has an 18-20% historical growth rate and even with the PE ratio being affected by one time gains the stock is being valued closer to a Value than a Growth valuation by the market. Of course this is the way it has been historically valued and will take some strong revenue and earnings growth to change.
The warrants seen to me to have a much higher risk reward senario at the moment; since the stocks historical volatility is around 50 and the implied volatility of the warrants is in the 30 range.
The company line on the "China Exposure" is that it is basically a wash to their business. Since they do most of their sales to US and Japan. The currency problem would seem to be a boon (sell goods in US dollars, buy materials and labor in local currency) , but since their competition has the same advantage it would lead to competitive pricing senario; therefor a wash in business effect. Still in my mind it is a lot like the oil companies that even with lots of competition (in a suposidly perfectly competitive market) they all seem to do better when the price of oil goes up (Go figure).

Dan D
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