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Technology Stocks : Cascade Communications (CSCC)
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To: Philip H. Lee who wrote ()2/24/1997 10:13:00 AM
From: Cary Salsberg   of 3743
 
To All,

I posted this at the "Networkers...BLOOD..." thread and I am interested in comments from people at this thread.

My general conclusion after reading 2400+ posts on the CSCC thread is that CSCC is slightly undervalued at the current price of 25. I updated my Zacks estimates and got 29 (PE .85 of forward growth rate) 24 (PE .70) and 19 (PE .55). While the 3 numbers indicate slight undervaluation, my interpretation of fundamental data posted on the thread also indicates slight undervaluation. CSCC is a strong player in an increasingly competitive arena. I believe predictions of its imminent demise are not well founded, but I also believe predictions of a quick return to the 60-90 range are also not well founded. I think a prudent investor could assume CSCC is fully valued at 30
and that it will grow at a 30% rate over the next few years. That is 39 in 12 months 51 in 24 months, etc. There is a chance that CSCC will grow at much more rapid rates, but there is a similar chance that its growth rate could be crushed by competition. This is a HIGH RISK stock, right now. I would not buy at the current time. It would be
safer to wait until the technicians advise us that a strong bottom has been formed or until next quarter's earnings and forward looking statements shed some light on the Jeckyl and Hyde views people have of this company.

Cary
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