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Technology Stocks : Ascend Communications (ASND)
ASND 211.05-0.7%Dec 1 3:59 PM EST
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To: who wrote (1597)1/16/1997 9:37:00 PM
From: Potato Farmer   of 61433
 
Serial Quarters Momentum vs. Growth
Quoting Paul Wu (to Xy I think):
"If you had followed USRX, CSCC, COMS and ASND for the last year or so, you should know that Quarter to Quater growth is what people examine. A growth from .31 to .32 really looks bad for ASND."

SERIAL quarterly growth is heavily watched by the earnings momentum investors, of which there are many since early 1995. These people want the growth rate in consecutive quarters to increase and keep increasing. As long as this happens they will pay almost any multiple for a stock. When the sales or earnings growth slows at all they are out ... Boom ... Gone.

GROWTH investors follow a more traditional style and look for growth vs. the identical quarter in the previous year (Q4 1996 vs. Q4 1995). They do not look at serial quarters too much because of seasonal factors. A long term record of continuous growth is great.

The plain old GROWTH guys love a quarter with sales up almost 200% over last year, and profits the same. MOMENTUM guys do not like a quarter with sales growth over the previous quarter of 15% when the previous quarters were 25% - 33% up.

Ascend is sort of between the speculative momentum area and the high growth area. I will not be suprised to see it down Friday as the momentum guys dump out. The longer term growth players will provide some support, because they will see a very healthy company in a very healthy marketplace and recognize the continuing potential here.

P.F.
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