To: ColtonGang who wrote (6363 ) 3/12/2001 4:35:26 PM From: ColtonGang Read Replies (1) | Respond to Emulex (EMLX) 22 11/16 -1 1/4: We've spent the better part of the day sifting through the wreckage in search of undervalued tech companies... One stock which we believe fits that bill is Emulex (EMLX)... This wasn't the case just a few months back, but in today's marketplace it's amazing how quickly a stock can go from over- to undervalued... Back on January 19th of this year EMLX was trading at 108 5/8 - just a few points from a new all-time high... Less than two months later the stock is down 79%... Business may be slowing for this supplier of fibre channel host adapters, hubs, application-specific computer chips (ASICs), and software products, but it ain't that bad! To the contrary, EMLX is projected to earn $0.21 in the current quarter, a 110% jump from the same period last year... Even using the lowest quarterly estimate of $0.16 (provided by First Call), the company would experience a 60% jump in year/year earnings... Not too shabby for a stock that has dropped 79% in less than eight weeks... The consensus estimate for FY01 is $0.81 (+113%), with a low estimate of $0.73 (+92%)... Looking further out, admittedly a crap shoot given macroeconomic conditions, the company is projected to earn $1.00 per share in FY02... The most conservative long-term growth rate for the next five-years is 25% v. expected industry growth of 20%... Corresponding PEGs (p/e to lt growth) of 1.24 (using low estimate for FY01) and 0.91 (based on FY02 consensus estimate) for a company growing earnings faster than its peers, and considerably faster than the overall market, makes EMLX a compelling long-term play at current levels... As you might imagine given its 79% plunge over the past couple of months, the stock's technicals aren't very pretty... But short-term, Briefing.com notes that EMLX is deeply oversold and poised for (at least) a modest bounce... Our initial upside target is 30, with a long-term objective in the 38-40 area. -- Robert Walberg, Briefing.com
