CUBE's recent price movement
My own opinion about what has been happening to C-Cube is that it is now a "former" momentum stock. When the Cabot market letter added C-Cube to its recommended list the stock got an additional lift. When it removed it from the list in mid-April, it caused a lot of selling. I personally think that when the earnings were reported, a lot of momentum players sold and confused a lot of people that understand the fundamentals better. I particualrly believe that none of this momentum players understood the earnings and the fact that C-Cube was paying taxes for the first time, thus it looked like earnings were slowing down, a no no for a momentum stock. I also think that C-Cube will report somewhere in the mid-fities (cents) in the next quarter which means that it will look outrageously good, compared to the last quarter. At that time the move will continue.
For those of you that dont know the Cabot Market Letter, let me give you an example: Last Tuesday the letter recommended MRVC which had closed that day at $40, On Wednesday it closed at $50, today it is at $65. Other stocks recommended by it now are Presstek and Iomega. The letter has had a very good record in picking outperformers since 1991.
My own view long term is that CUBE will take advantage of its leading position. Others will come into the market, all of them will make tons of money. But Cube is the leader in technology, it was there first and has done a lot of marketing that others have not. The strength in demand can already be seen from the fact that nobody is lowering prices yet.They dont need to. Cube will make lots of money on all facets, but I have noticed that the CEO always emphasizes the mass market consumer side rather than the PC side.
Sorry for the length and I am sure there is some repetition in my text from things that have been said before but I thought it was important for teh discussion to say these points.
I have a Reuters system at work, I can actually look at all trades, so I will check tomorrow if there were any 90,000 share blocks today.
Enjoy the ride with all the bumps!!!!!
Miguel Octavio |
