I have a theory on the behavior of ACTL the past couple days. When the market went to hell on Monday, ACTL, ADPT and a few other weak semis, on a % basis, did not fare as badly as the big names, kinda lost in the noise I guess. Then Tuesday as the bargains presented themselves, the big names ran up, with buyers behaving like kids in a candy store.
But what if a buyer has no cash on Tuesday, having watched Monday from the sideline? Simple, sell the dogs at any price to buy long term winners at bargain prices. Ask the question, how much ACTL would you sell at $10 to buy CSCO at $80, or Dell at under $100, or MSFT, or INTC, or ALTR, etc. etc. The theory being the long term winners will deliver more growth than the dogs.
I am still a believer in ACTL moving toward a reasonable PE for their performance. With 98 earnings of 66 cents and 99 at 88 cents, we are looking at good growth. If they can start to demonstrate a roadmap to that kinda eps growth on a longer term basis, then a PE of 1.5 to 2X what they are at today is not unrealistic (today = 14 times 98 and 10.5 times 99).
That said, will ACTL move from $10 to $20 before ALTR moves from $30 to $60? Before INTC moves from $70 to $140? CSCO from $80 to $160? DELL from $100 to $200?
I want to believe in ACTL, but a few steps in the direction of validating the 99 eps estimates, and a view that 2000 and beyond will deliver further solid eps growth, will make me more comfortable in this position.
-tt |
