Compaq Message Board - Msg: 3787697

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Technology Stocks : Compaq

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To: robbie who wrote (22776)	3/20/1998 10:25:00 PM
From: van wang	Read Replies (3) of 97611

the valuations say CPQ can go to 18 before it is fairly value relative to growth rates...at 21 (LT growth rate) X FY estimated earnings, the price is 18 1/2 and many stocks trade with PE below its growth rate I am short CPQ and I did it for SPECIFIC reasons...anything that counters these factors I will cover...or if the risk reward is not reasonable...like if it is $1 off my target...It is wrong to assume I will be short indefinitely...it is wishful to think that longs will be eating my lunch...and incidentally, I feel pretty well fed lately it is also a misconception to think that CPQ is cheaper than DELL...everything has to be compared to their respective growth rates...remember DELL only has alittle of 5% of the mkt share while CPQ has over 15%...they can still grow and have grown in excess of 60%...which justifies their PE...DELL's LT growth (next 5 yrs) is estimated to be 35% while CPQ (by virtue of size) is only 21%...relative to the growth rates, DELL's PE valuation suggests that it is fairly valued...I believe that DELL's growth and its PE will be taken down over the next 4-6 wks...IMO that is why DELL straddles between 60-65...because people are nervous while some think they will be continue to be the winner by virtue of their superior business model which provides quality earnings and inventory visibility... CPQ leaks because of the its valuation and untimeliness..IMO...just because the company is not going to fail (aka be around in 5 yrs) does not mean the share price will levitate in the short term...fund mgrs are paid for short term performance I think that if shorts are taking a whack at my longs..I listen carefully at what they are citing and look for corroborating evidence...and if I like the stock...and I think it is destined for near term weakness I sell...if you sold at 27-30, the savings you would have derived more than offset capital gains...also that junk about if you dont sell you dont incur a loss....hey, if you account balance is lower you loss money...face it...the question is what do u do right now to increase wealth hav a nice weekend

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