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Strategies & Market Trends : Range Bound & Undervalued Quality Stocks -- Ignore unavailable to you. Want to Upgrade?

To: BWAC who wrote (1795)	4/13/2000 2:39:00 PM
From: jbe	Read Replies (1) \| Respond to of 5499

Thanks for the replies on EGRP(and AMTD). BWAC, let me continue to play the devil's advocate here. There are certainly many ways to define a "quality" company. But since the header of this thread defines a quality company that is already profitable, then, it seems to me that both EGRP and AMTD miss the cut. I already own stock in one brokerage company (SWS), which happens to have done nicely for me so far this year, and I am not looking to buy stock in any more. But if I were faced with the alternative of buying NDB or EGRP (or AMTD), I would choose NDB in a heartbeat. Why? Because its revenue growth is almost as high as EGRP's, while its growth in profits is demonstrable, not just projected into the future. Furthermore, NDB has reasonable valuation ratios (unlike EGRP & AMTD) and has a nice balance sheet, which are generally considered attributes of a quality company. What is particularly striking (and, to me, off-putting)is the high cashburn rate at both EGRP & AMTD. Are they spending ALL their humungous revenues on advertising?!? The cashburn may slow down if they cut back on advertising, as both companies say they are planning to. But consider this: maybe their projected profits will slow down (or, rather, evaporate), too! How about this, as a theory (only a theory, because I am not really familiar with either firm)? The only reason EGRP and AMTD have been able to attract as many customers as they have is because of the advertising, not because of the service they provide. In all the ratings of online brokers I have seen, AMTD and EGRP score quite low (with NDB almost always at the top of the list). And so, the less they advertise, the more likely it is that customers will go to competitors with better reputations. Sounds as if this could be a real Catch-22 situation. Hmm?