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Technology Stocks : Equinox Systems (EQNX)
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To: Scott H. Davis who wrote (330)3/16/1998 8:22:00 PM
From: Rob S.  Read Replies (1) of 765
 
Using the simple historical valuation measures makes EQNX look fairly valued on CURRENT sales and earnings. That is not what I and, I hope, a lot of other investors are focusing on. They have demonstrated renewed momentum in sales and earnings growth and have said that they expect that to continue throughout '98. On top of that they have the newly announced IBM agreement which has not been fully figured into the picture. My understanding of the market is that EQNX products should flourish over the next few years. From my perspective, EQNX looks very much like a growth stock rather than a value play. Its nice to have a firm foundation to stand on, but the future growth is where the excitement is for this stock. They have an agreement that is expected to be signed with NXX in the near future that should add another notch to the growth outlook.

I think the stock is vulnerable to unwitting investors who may look at the current ratios and think that it is time to take profits. I've done that myself in similar situations. But when a company is poised for a substantial up-trend in growth, its not the time to bail out or be timid. The problem with historical valuations is that by the time you see that they have improved, the stock has likely already moved to higher ground.
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