[Larscom LARS response] LARS is a company that was overvalued when I started looking at them in 96 (I thought EQNX, PTIX and (speculatively) SBEI) were better values at the time. They were overvalued at 15 in early 97. But the market over reacted twice last year. It plunged in July when they met estimates but had nervous "forward looking comments". It oversold in late Dec again. Earnings are .07, .14 .14 -.56 and .09 last 5 qtrs. I can't find the Dec release, but the loss was mostly related to an acquisition. Absorbtion costs were a drain last qtr, but in the Apr. release, the coment was that the integration is proceeding on schedule. Over the past year they have been anouncing some interesting product development and contract wins releases. This is a case for rational analysis - TA alone would not necessairly show that they are recovering from an oversold condition. Looking at the research option under Zacks indicates that it has 1 strong buy and 4 buys, with a projected EPS growth rate of 47%. So combining the TA, FA and what I call "business case" (state of the business, products and its industry) are an important part of the analytical picture, for intermediate to long term holdings that is (I don't do short term trades)
So we have a business that is making progress (with some disappointments) in their business plan, has improving sales in areas of significant market growth, recovering from being oversold. Not to beat up on anybody, but not a good short candidate in my opinion.
My error is that I forgot to check back on LARS earlier - I missed an opportunity.
Note: I'm not recomending a LARS purchase for myself or anybody. I'm in the midst of a major biotech review for myself, and now for 2 frields recently diagnosed with cancer. But based on what I looked at today, this merits further review, especially if LARS retrenches back into the 9s. IMSCO Scott
Rainier, Dave or other TA heavyweights - from a TA perspective, what would a reasonable pullback target be? |
