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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (12188)	3/20/2001 12:06:07 AM
From: Bob Rudd	Read Replies (2) \| Respond to of 78627

Paul, SOL, Your timing better than mine. I jumped out in 7's puzzled by the price rise on no news. One of my current fav's is AREM Selling at less than 15x '01 expected earnings [They've recently reassured] They do ERP software to smaller companies globally in 4 verticals. Are growing organincally @40%. Key competitive advantage is that labor is based in India where software engineers work for about 10k/year. Saw this about AREM on Raging Bull - summarizes the case well: "SG COWEN REITERATES STRONG BUY, "CONSERVATIVE" $32 TARGET Key Points: 1) Stock Down 32% over last two trading sessions versus 11% decline for NAZ 2) Strong performer unduly penalized in tech-slide and offers buying opportunity 3) Positive management comments on Q1 and outlook for '01 strengthn our view of continued operational strength 4) We exoect another strong quarter and upcoming industry conferences to raise investor interest. ...stock is trading at PE of 7.4 times 2002 estimates, compared to S&P trading at 18.4 2002 estimates. PEG for AREM is 0.22 compared with S&P 3.1. We believe that Aremisoft is significantly undervalued. Using the above, this implies that the company's shares are trading at more than a 90% discount to the S&P's out-year PEG estimate. Furthermore, our $32 12-month price target represents a PEG of only 0.5 times and a PE of 17.5 times, both at a discount to the S&P. In the current environment, we believe that a PEG of about 1.0 times is fair value for many software players that we follow, and at a 0.5 time PEG, that our 12-month price target is conservative. We reiterate our 1 (Strong Buy) rating and 12-month price target of $32."