I agree, Jon. . .
This from the current issue of "The Prudent Speculator":
Stock of the Month
We have tailored this feature to subscribers seeking a single investment idea and investors who are utilizing a system of dollar-cost averaging, allotting a fixed amount of money each month for stock purchases. The latter has proven to be an excellent strategy as the ups and downs of the market are smoothed by buying more shares when stocks are low and fewer shares when they are high.
Transferring document ... Wait ... Wait ... Wait! As AOL's web browser triangle or Prodigy's star spin incessantly while downloading data from the internet, the Information "Superhighway" often seems more like a "Snailway". Current conventional modems (devices that transmit data across phone lines) are maddeningly slow, operating at speeds of 28.8 or 33.6 Kilobits per second. Faster alternatives, such as digital "ISDN" phone lines and satellite connections that can transmit data at 128K are very expensive and unreliable. Happily, a mass-market technological breakthrough is about to occur, as companies such as Zoom Telephonics (ZOOM - $9.00), March's Stock of the Month, begin to ship new 56K modems, capable of down- loading data at up to twice the current speed.
Although the rollout of 56K modems will be slow, as the two competing hardware camps, K56flex from Rockwell (ROK - $64.63) and x2 from U.S. Robotics (USRX), have yet to agree on an industry standard that will allow the rivals to communicate with one another, modem shipments should reach 40 million by 1998 compared to less than 20 million in 1995. In fact, research predicts that by the year 2000, more than 66 million U.S. households will be on-line, four times the number connected today. Zoom, along with 75% of the market, is utilizing ROK's K56flex chipsets.
While USRX is certainly a formidable competitor and recent earnings reports have disappointed, we believe Zoom is well positioned to land a good share of the 56K demand as its original equipment manufacturer (OEM) business grew to 19% of revenues in '96 and its distribution channels now include CompUSA and MicroAge. Sporting book value above $6.00 a share, while owing no longterm debt and trading for just 64% of sales, we think ZOOM is a marvelous bargain, considering that USRX trades for 216% of sales and seven times book value. Selling for a third of its '96 high price, Zoom is currently your Research Director's favorite stock. With a three-to-five year target price of $21, we would now buy ZOOM up to $10.35.
John |
