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Gold/Mining/Energy : Dorel Industries (DII.B , M or T) good earnings report -- Ignore unavailable to you. Want to Upgrade?

To: Jay Arkay who wrote (67)	10/30/1999 11:40:00 PM
From: Hassan Lakhani	Read Replies (1) \| Respond to of 96

Hi Jay. I think you made some very astute comments with regards to Dorel. I believe that Dorel's price decline on Friday was due to the relatively low revenue growth rate of 8 per cent. While the EPS growth was very impressive, investors generally look to the future earnings, and there is a limit to how much earnings can grow through cost-cutting. In the end, revenue growth is required in order to have steadily rising earnings. I personally was a little disappointed by the revenue growth, but not too concerned. Revenues did still grow, despite the fact that the year earlier quarter included revenues from the now closed Leadra. There are very few firms which can boast having a steady growth rate. I would be concerned if it appeared that the growth slowdown was the start of a trend, but I see no reason to believe that to be the case. Since such a large portion of Dorel's sales come from the U.S., I view an investment in Dorel as largely being a bet that U.S. consumers will continue to spend like they have been over the past few years. Assuming that Mr. Greenspan continues his masterful job, I see no reason why U.S. consumers should alter their spending patterns significantly. I am also enthusiastic about Dorel's expansion into higher end lines through Ameriwood and Eddie Bauer. With regards to my previous sale, unfortunately, I cannot take any credit for my timing. I previously sold my shares a few months ago for approximately $26 per share. When I buy a stock, I usually set a price target based upon expected EPS and a reasonable PE ratio. Once the share price gets close to my target price, I then use some technical indicators such as support/resistance, Bollinger Bands, etc. According to Zack's, the expected EPS for 1999 is $1.87. Using a PE ratio of 17.5, my target for next spring is $1.87 x 17.5 = $32.73. That would represent a nice return from the current price! Hassan