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Several posters have offered their opinion that CD has a limited downside risk of about three or four points (to 20). I disagree, and not on the basis of an overall market crash. If the audit turns up more irregularities, no matter how benign, the stock could easily be punished down to fifteen or sixteen dollars. That may again be an over-reaction (as 18 and change seems to have been this time) but in a high market such as we have these days, companies with the slightest of problems get whacked. I agree with Rory that the picture will be much clearer when the audit is completed, and at that time, if the report looks good for CD, the risk-reward ratio will really be in the buyer's favor. Sure, you might miss three or four points by then. Better than losing eight. And if the audit is clean, CD is a strong bet to double within a year (high forties). If you wait and buy, even at 28 or 30, you won't, IMO, be unhappy. |
