Hello JFrancis:
I don't know CNMT. In a fluffy market I would like to think I am primarily a short seller. Investments don't explode generally. In ignorance knowing nothing of CNMT, I would not categorize HTCH as having explosive potential price-wise. It is not the nature of the business HTI is in--they react to demand. It takes months to build new equipment, they have capital limitations, margins are not obscene and tend to get levelized in a few quarters in the HDD industry, and HTI visibility to the myriad of variations of assemblies they build is less than the time to put equipment into place. In summary, capital is a big flywheel, costs are scrutinized--that is not the makings of a story stock for explosive price increases.
HTCH is not a battered down stock particularly either. At 12-13 recently yes, at 20's to 30's no. Earnings cycle up and down through spells with HTCH. For that reason the stock P/E will be discounted compared to more diversified and regular earnings companies. However the variability makes the stock attractive for trading. Buy low, sell high; or vice-versa. Trading ranges have historically been over a range of 2-3 or so from annual low to annual high. The annual highs and lows tend to be brief in duration. I think if one can nick 50-100% in HTCH in a year to 1-1/2 time frame, one is trading the stock very well. The hard part is knowing when. Generally it seems selling when the price seems ridiculously high and 3-fold or more over the annual low seems to be good for money on the downside. Typically when the stock price is low and it looks like HTI may be heading out of business has been the best times to buy--when it is scariest to hold, let alone buy. I note if one could have taken say a $100K stake when HTCH went public and sold at the annual top, doubled up by selling an equal amount short, and bought back double at the annual low on margin, then one could have had majority interest in the company by shares several years ago, and if they still have cumulative voting, by proxy long before holding a majority of shares. I think that captures the cyclical volatility and trading quality of the stock. OTH HTCH could have gone out of business, busting that scheme. No one invests that way. I agree with other who trade HTCH, that one could make a fair living on a stake that was sold at the top, shorted and ridden down to the bottom, doubled up, etc. Knowing which end is which and when remains the hard part.
I am arguing now and watching to see if it holds that HTCH should be more volatile, because the variability of the more complex business TSA represents should prove more volatile compared to the relative simplicity of conventional suspensions. IOW, HTCH may become an even better trading vehicle. But $100 from a low in the teens would be out of line this year. The stock can be traded simply by mechanically looking at the annual report and estimating the next year's range of possible prices; historically that is. The stock is volatile. But year by year price ranges historically have plodded along since public in the mid-80's within a range of a few multiples from high to low. I am glad HTI seems to have turned the corner on TSA when it looked like they might not make it last fall with nearly two years delay in coming around. I take this to indicate they remain a going concern with TSA. Provisionally. I would like to see a few more healthy looking quarters under the belt, and not necessarily the next quarters either--but within 4-5 quarters forward.
Two adages come to mind: "the problem of forecasting the future is that is is never what it used to be", and for the stock analyst crowd, "make predictions frequently and generously, sooner or later you are bound to get one right!" I am starting to dabble at some of the technical analyst measures for HTCH. It is far too early to say whether there is anything useful there other than a sanity check on my sense for over-valued or under-valued. If I see something, I will likely bring it up here for commentary. I boxed my long at 24 a couple days ago for 4-5 points because HTCH did not go over 25 a few weeks ago when I thought it might go to 25-30. I hope I can open the box in the low 20's in the next week or two and keep plying the 1-2 point range for short term gains while the stock should be trading in the doldrums on no news and moderated seasonal HDD demand. I expect demand to pick up sometime this year, but not now. With some cushion under me I have some room to try to work the short term meanderings of the price.
Just think, in a few years we should be able to scope company parking lots regularly by satellite and correlate parking versus production with better than quarterly resolution, possibly to weekly resolution. Could work pretty well with HTI I would think--labor intensive production and wide open plants without mass transport nearby. Then we would have another factor to go bonkers over trying to estimate what was coming next. I am only trading 1K lots so my stake is modest and does not justify much stretch for better information. Enough comes through the market to keep me busy at it. I admire those on this thread that track the various programs and margins in the business--and even model these! I am a much simpler soul than that--or lazier. Again, my stake is modest and I don't plan to capture nuances first. The stock seems to be a fair trading vehicle now in a market that has got to be a traders delight in general.
Best regards,
m |
