I got out at 7 1/2 to protect what's left of my paper profits from a buy last September. I had been planning to hold until 10/1 to get mid-term cap gain tax treatment, but I think there are too many negatives hanging over the stock at this time:
-- Likely no earnings data until sometime in Sept. What the Street is looking for is some confirmation that TAVA can make money, so the stock may at best drift until the annual #'s come out.
-- Street basically ignored the Rio Tinto news this week. Granted, the broader market was in a major downdraft, but this is still a big (and troubling) change from historical TAVA trading patterns.
-- Management has bungled some opportunities to showcase the business (e.g., last conference call, CNBC). That wouldn't be so bad if this were Microsoft, but with TAVA's historical fundamentals the stock would greatly benefit from a stronger sales job from the top.
-- Even if TAVA reported fantastic numbers for the Fourth Quarter, there's serious potential they're already priced into the stock. The issue of "is there life after 1/1/00" isn't going to go away. Unless TAVA addresses this issue with credible and detailed plans, many investors may view the next few quarters' earnings as basically a one-off event, and thus discount them heavily.
-- Overall, market sentiment appears to be skittish about high equity valuations. If this continues, stocks with poor earnings visibility (like TAVA) may be hit disproportionately.
Net, I see TAVA going lower before it goes higher. Time will tell if my getting out marks the turning of the corner <g>.
Regards,
CMason |
