My guess is that the 25% growth rate would be applied to an average of APM's earnings over the past several years. They earned $0.05 in 1995, $1.35 in 1996, and $3.95 in 1997 giving them an average of $1.78 for the past three years. The four year average will obviously come down significantly if they lose another $2.00 in the last two quarters of this year.
As has been noted on this thread many times, APM has a tremendous amount of support near 10. I think there are several reasons for this, including:
1. The market has likely discounted all the bad news and better times are ahead for the company. In fact, the entire HD sector looks like it has bottomed to me. WDC, SEG, KMAG, and QNTM also have nice looking charts.
2. There is a large short interest and they are covering near support.
3. Fundamentally, APM is trading at only 1.3 x book value and 0.7 x sales. While their earnings have been very poor, these numbers are still reasonable, especially if a turnaround in the entire industry is coming.
IMO, anybody who remains short at this price is taking a big chance of sustaining a huge loss.
Best of luck to all,
Dan |
