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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis
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To: Q. who wrote (1027)5/8/1998 11:52:00 AM
From: mattie  Read Replies (1) of 2506
 
Hi John,

I always start with fundamental analysis and use technical analysis to back it up.

I can give you a summary of my fundamental research, but I am at work and do not have all the numbers available:

IBP -slowing demand from asia, increasing labor costs (meat packing is very labor intensive), increasing food safety costs (wittness their recall last week), increasing feed costs. IBP's margins should actually be negative this year. Overall sales are flat, but costs are much higher, so earnings are declining.

NSM - taking on Intel. They are losing market share and they have to keep investing in the latest technology. They will not be able to gain against Intel and AMD.

Of the 2, I am more confident in IBP as a short. They are both lower today as the market is up ovr 1% - a good sign for the shorts. I also shorted EK this morning. Looming price war and the stock is up 40% this year. Look for a test of the lows.

Good Luck!

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