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Gold/Mining/Energy : JDS Fitel
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To: Stew who wrote (689)2/3/1999 5:55:00 PM
From: Hank Stamper  Read Replies (2) of 815
 
In previous posts I questioned the price of this stock as it got to the $50 and above range.

I understand that it's (and now Uniphase) growth rate is huge--it's a well-managed company in an industry now in a take-off phase. However, it is very unusual for any company to sustain this kind of growth over a longer period of, say, five years. It is simply a fact: only a very few companies grow above 25% or 30% for long periods and, it is very very difficult (many say impossible) to identify those that will. I don't believe anyone can reasonably predict that JDS will sustain 60% and 70% plus growth over the longer haul. That's just a dream because there are too many random variables--the business world is simply too complex for any one company to be able to have that much control over its earnings.

If my assertions are correct, it is risky to buy at these prices expecting $150 soon. As I see it, especially with all the conditions in place for a market correction, there is little upside potential and a great deal of downside potential now in JDS in the contexts of JDS's run-up and the broader markets.

But then again, what do I know? I wrote the same darn stuff back at a p/e of 55 when the highest p/e the stock had ever had before it reversed was 50. I guess I just like to look too much at the fundamentals and get nervous when things stray too far on the up side from history. <g>

Ciao,
David Todtman
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