I don't feel that BF is "two smart" - he is simply a conservative forecaster, which is in his nature as an accountant.
IMO, the reason that THQ stock languishes is two-fold.
1) As Todd mentioned previously, the only thing most people want today is the volume and momentum of the large caps. A year ago I argued against the bubble theory, but following the three fed rate cuts and DOW 10000, I believe it.
2) I believe that investors can envision that this companies profits could fall severely, as well as this industry. This is an industry that is easy to understand. Make hit games, sell lots of them, make lots of money, hope you come up with more hits. People understand that there is risk that the next game won't be a hit. So ala Peter Lynch, they buy stocks that they don't understand, which they ignorantly and blissfully feel should trade at PE's nearing triple digits because they "have technology and are good", or that they "split the stock", or that "it doubled last year".
And when stocks which were 50% overvalued last year double again, they are not 100% overvalued - they are now 150% overvalued. And it hasn't stopped there - the potential drop in some of these stocks is amazing.
THQ still offers the best combination of growth potential and reasonable valuation that I can find. Add to it management that I understand and feel makes good decisions, and I'm happy to continue holding and purchasing.
Kory |
