Looking at the few millions of profit these two companies made each quarter and their products, their few millions of profit can easily diminiish in a global slowdown with their smaller base of customers, and at that time, these two stocks can easily drop
into the $2 area. Just look at those stocks, LSI, VLSI, CCEE ....etc. They all made profit few quarters ago, and what is the stock price now ? The problem for small companies are the customer base are too small and it is very vulnerable, that is the reason why it is very difficult for those companies to sustain consistent growth.
Look at CSCO, the market is global, and the customer base is diversified, and the
growth is consistent. Even in a global slowdown, its market can still grow, but maybe in a slower pace. When you buy stocks, you got to think about the risk factors. The PE did not tell you the whole story. It is very hard to see CSCO hit a red in such an emerging market for global network. But for Vsio, and prem , it is really hard to say.
Maybe next quarter you will see a red easily, just looking at their products, it is not
a product which can dominate the market, like INTEL's CPUs, MSFT's OS which every PC needs one, and CSCO's switchs ...etc. All in all, it is the risk factors and consistency of growth and earning which make the difference between big cap and small cap stocks. The PE did not tell you the story. That is the reason why the small
cap stocks always hit hard , and first, and the risk is very high !!!! |
