Scott:
At the risk of sounding like an apologist who is just making
excuses for a stock he likes, this is my analysis of the situation:
FEET started up at the beginning of the week, gaining half a point
on Monday, then another quarter of a point on Tuesday. On Wednesday,
Greenspan made his now infamous comments before a congressional
committee that send the stock market into a tailspin. This seemed
to affect FEET heavily, plunging it into the 21 range.
When people get nervous about the stock market (as they tend to
do when Greenspan comments), they abandon the high flyers and more
risky stocks first. I would put FEET in that category because it
takes a good deal of faith to keep money in a stock whose price
depends on increases of 50-100% per year.
I think the stock has pretty much reached its floor because the
PE going forward is pretty much about the same as the overall market
right now (low 20s). FEET has had a PE as high as 80-90 within the
past year or so. If it ever moved back to that range, the price
could go to 75-85! (That was not a prediction. I don't believe
FEET can continue to grow at 100% a year.) I do think a PE of about
50 is justified for the next year or two, and thus a price of about
50. Before that happens, people (i.e., stock buyers) will have to
regain a lot of confidence in the market and not fear a major
correction. It may take at least a slight correction to get us to
that point, however.
I welcome anyone else's perspective on this and would like to
hear any arguments disagreeing with me. We only learn by understanding our opposition!
Walter High |
