The simple reason Ascend is not a good value at $55 is called competition.
Right now, ASND is largely winning against its competition in its two major product lines, RAC and ATM switching. Thats why they are trading where they are. And because they are not a value play at 55 (I agree with this 100%), does not mean I would buy puts. I would buy puts (actually I prefer to short, but even rarely do this, except on a short-term trade) only if I thought the fundamentals had changed. The fundamentals on ASND haven't gotten worse, in fact, I feel they are improving, and they will IMO begin to catch up with there PE, likely starting with this quarterly report. I am betting this way. If you don't think this will be a good quarter, buy the puts now, you won't need 55 to make alot of money.
but any return to the heady days of 1995 is unthinkable. As such, this stock is certainly overpriced at its current pe ratio of more than 40, and will be so even if they get a couple of quarters that are up slightly. They simply do not have the growth potential to fulfill that type of market valuation.
Actually, ASND and CSCC used to trade with PE's more along the lines of 80-100 than 40. And you are right, those days are over in the networking industry, and have been passed on to interent stocks. ASND is only overpriced WHEN they fail to grow at 30-40%. In the mean time they are fairly priced. You are willing to bet they will fail sometime soon, I am not. If I sell my long, I certainly won't be buying puts right now.
When the stock falls into the low 30s and 20s, then we start getting to an area where it is a decent buy.
Hope you don't wait this long to sell those puts. I will be a long wait.<g> They would need a real bad quarter to get to this level. Won't happen; at least as long as they are trading with the symbol ASND.
The current ruling one is that this has been a short-term correction and that Ascend will return to its former glory.
Wrong. ASND will never again trade at 80-100 PE. I don't think anyone has this perception. But they will likely grow steadily, until they are bought out. I think this is more the current perception.
BTW, I have enjoyed this exchange.
Gary |
