Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Bill Wexler's Dog Pound -- Ignore unavailable to you. Want to Upgrade?

To: Mad2 who wrote (3629)	9/16/1999 6:52:00 PM
From: Mike M	Read Replies (1) \| Respond to of 10293

mad2 if you were trying to take the high road you blew it. This is still a two horse race and I still believe you haven't a clue....you are consistent, but you haven't a clue.

To: Mad2 who wrote (3629)	9/16/1999 8:26:00 PM
From: DanZ	Read Replies (1) \| Respond to of 10293

Mad2, I'm really REALLY trying to understand why you think GUMM is overvalued. To date, you have only provided book value and price to sales as your justification. Please help me understand where you are coming from with the following case analysis. In calendar year 1998, GumTech had sales of $5.27 million and the number of shares outstanding at the end of the year was 6.858 million. Based on today's close of 13, the stock is trading at 16.9 times 1998 sales. Is this high? Let's look further. Sales in the trailing twelve months (TTM) are $7.32 million and there are now 7.27 million shares outstanding. Based on today's close of 13, the stock is trading at 12.9 times TTM sales. Is this high? Well, the trend in price to sales is down even though the stock price doubled in the last year. The reason is because sales grew faster than the increase in market capitalization. Now, let's look at a future estimate. This is where we may differ, but hey, one has to make estimates when investing based on fundamental analysis. I think GumTech's sales will approach $100 million in the year 2001. I'm basing this primarily on sales of nicotine gum and Zicam, and to a lesser extent dental gum. Let's assume that the number of shares outstanding in two years is 10 million (33% increase) and that the stock price quadruples to 50. Under this set of circumstances, the price to sales in two years would be 5. Is this high? I don't think so. Do you? My point is, you can't conclude that a stock is overvalued because its price to sales is above some arbitrary value. You may disagree that GumTech's sales will be $100 million in two years. If so, tell me why and I'll see if I agree with you. You aren't going to convince me that any stock is overvalued simply because its price to sales is high by your standards. You have to give consideration to the growth in sales. To Druss: I appreciate your comments and retract my cult remark. That word is too strong, although I think that the loyalty extended to Bill goes beyond what is reasonable given his actions. I believe that it is irresponsible for others to condone his claims that the management of any publicly traded company is committing fraud without providing proof of that accusation. In effect, people who do not tell him that he is wrong, and even come to his defense when people like me speak up, are condoning his actions. Still, my cult comment was inappropriate and I apologize for saying it. Best of luck to everyone, Dan