Exactly Agora! I don't for a minute think YF has any chance of going out of business. But I like a gamble where my downside is;
1) Highly unlikely
2) Even if the Downside does happen - losses are not catastrophic
3) Upside is likely
4) And lastly, not only is the upside likely but also potentially HUGE (for example, you cannot say this last point about the bank stocks!)
I am fairly speculative risk-taker but if I can help it - I like to stack the odds in my favor. And unlike the Day Trader who sit in front of their terminal all day and are trying to make few bucks each day -- I have the luxury to sit and wait for few years for my strategic investments to either bomb or take-off.
My parameters are as follows when I am trying to detect the next Dell, Microsoft, or Intel before they get too pricey;
1) Look for Small Cap (under billion in capitalization)
2) Were once a Street darling and had good following
3) Stock price has fairly high volatility (which means I can scoop them up when the sentiments are overly bearish - thanks to the momentum/daytraders)
4) Has LOTS of cash & no debt
5) Has Good Aggressive, Young Management
6) Is in a growth market (frozen dessert is not the highest growth market but it's not the most mature industry either as the consolidator/specialists have not emerged like in other retail sectors - i.e. CATAGORY KILLERS like Gap, Businss Depot, Amazon.Com, etc
7) Stock price is selling at near it's all-time low when the basic fundamentals of the company or the market has not changed
Using this approach, I bought Psinet at $5.50 a year ago and is now trading at $29 US.
I have also taken a strategic position on Operating Support Systems (OSS) companies like CrossKeys (CKY), OSII(Nasdaq), TCSI(Nasdaq). These are all small caps with tons of cash (relative to their size), good products, in a brand new - huge market of supporting the back-room, billing, network mgmt support systems of PTT's like Deutche Telecom, QWest, MCI/WorldCom, Viatel, Frontier, etc.etc.
By the way - is Agora a person or an organization? You seem to have an above average understanding of the market. |
