Blue Ice:
>>>I've had it since 1996. For the past year and a half, I've found Patheon to be fairly dull to follow. The stock doesn't do much most of the time. Every so often the price will perk up, lose some of its recent gain, flat line for a while, perk up, lose some of its recent gain, flat line, etc...
I have held PTI since March of '94 and it definitely has been on a general uptrend with many twists and turns. I bought in Mar '94, Feb '96 and May '96 (average price $1.10). My annual return is 46.80% over 4 years, so I never have found it to be dull. I though that it traded below $1.50 for most of 1996, so most people that have held since then should have doubled their money. That's pretty good for 18 months or so.
That being said, I didn't like their latest quarterly report too much. While sales are up $3M, this is offset by Accounts Receivable which are up almost $4M, and Inventories are up about $2.6M. So we have a case where they are selling to inventory.
Also, their debt is up. If the management keeps spending like they are, and writing off assets like they have been, they will find debt to equity ratio increasing and they may find it hard to borrow more money, which may cause them to have difficulty expanding further. Looking longer-term, when they need the $, they may have to go to the market for more equity, and we will have more dilution.
Based on my own estimates, I think that the stock may be overpriced. Consequently, I have sold about 60% of my position. If it makes another big upward move, I will be looking to sell more. For my estimates, I am assuming $0.12 eps, this year, and assigning a P/E of 20 to the stock, I see $2.40 as the fair value. I would be a buyer about 10-20% below that, say the $1.80 to $2.20 range.
Regards,
John Sladek |
