The Round Table: A work by the squares of the SNDK thread. Message Board

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Strategies & Market Trends : The Round Table: A work by the squares of the SNDK thread.

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To: Ausdauer who wrote (11)	2/26/1999 1:30:00 AM
From: Ausdauer	of 194

The Round Table Ausdauer's Investment Strategy (page three) Evaluation of Potential Small Cap Growth Companies 1)Annual revenues of USD 200 million or less. 2)Daily dollar volume of USD 50,000.00 to 3,000,000.00. 3)Share price between USD 5.00 and 20.00. 4)Net margin of 10 percent or more. 5)Relative Strength (IBD rating) of 90 or more. 6)Quarterly revenues/earnings growth of 25% or more (year-over-year). 7)Insider holdings of 15 percent or more. 8)Positive cash flow. Promising prospects then must demonstrate consistent or rising margins, steady R and D expenditures, be taxed at a full rate, and not be issuing shares (diluting) rampantly. The balance sheet must be clean with cash on hand, little debt, and with accounts receivables and inventories growing proportionate to revenues. One must then evaluate cash flows and finances for the year to follow. If an investment passes all of these tests, the final assessment is the entry price. This is by far the most difficult task of all. The Motley Fool recommends essentially waiting for the PE/G ratio to fall to 0.5 or perhaps slightly higher. The beauty of this approach is that one can invest in a stock without really knowing what it is that the company does. You are investing essentially on fundamentals and you don't have to know a what an EEPROM or an ATA controller might be. IT REQUIRES BLIND FAITH IN THE COMPANIES PREVIOUS FINANCIAL SUCCESS. At the time I invested in SNDK I felt fairly secure that the majority of these conditions were met. Nonetheless, the floor fell out of the semiconductor market and before we knew it SNDK was selling below cash value. As Rex and others pointed out in early October many high tech companies were selling at bargain bottom prices. This leads me to one of my favorite quotes... "Buy when blood is running in the streets." §§§§§§Page forward to the next post.§§§§§§

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