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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Bill Harmond who wrote (7008)	5/20/2001 6:10:15 AM
From: craig crawford	Read Replies (1) \| Respond to of 57684

>> Ciena just beat street estimates by a wide margin during this bust in the markets for communications equipment. Ciena is small and it's taking share. << But you notice their stock price didn't respond. Highly valued stocks like CIEN don't have to plummet from these levels, but they could trade in an excruciating range that frustrates the hell out of everyone for years. --- 52% of CIEN's revenues came from two customers --- "At least one competitor is going to desperate pricing measures," said new CEO Gary Smith --- Officials acknowledged that gross margins could take a hit --- CIEN is trading at 80 times this years earnings --- CIEN is trading at about 10 times it's revenue run rate (and it's getting a large enough base where hi-growth rates will be difficult to sustain) Now Bill, a lot of things have to go right for CIEN to justify the current valuation, let alone a nice investment return going forward. ( I assume you're not looking for 10-12% returns, but more like 100-120%) Most importantly, I think it will need a return to the kind of runaway investment and multiples seen at the end of a bubble. I just don't see how that can happen. When you have over-investment for such an extended period of time, and people get burned, they just never go back to spending the way they used to. For one thing, many go bust and have nothing to spend. The rest who survive the carnage are much more careful going forward. That is something that just can't be helped, and it translates into new (lower) valuation parameters. The main point I'm trying to convey is this. Sure there will be some sectors and some companies that find a way to succeed in this new set of economic conditions and valuation parameters we have to deal with. But I believe they will be the exception, not the rule. Tech stocks these days are like salmon who are climbing the ladder to spawn. It's a difficult uphill swim, if they can even find the ladder they need to climb. Most won't make it. A couple of years ago you could have bought just about any tech stock and generated unprecedented returns. The odds strongly favor that not returning anytime soon. History supports that view. Rather than the frustration of trying to get the mo to return to these 4 letter stocks, why not take an easier route? Instead of hoping we can re-inflate a bubble which has already burst, why don't we look for a totally new and different bubble which is just starting to inflate? When you find a new bubble forming you don't have to be very discriminating. Everything runs and runs hard. That's not happening with tech stocks. Sure they run hard when they get oversold, but the running stops as soon as they approach a major downtrend line, resistance, or some overhead supply. Why restrict yourself to only tech stocks? There are whole sectors that have suffered several year bear markets and are just starting to emerge. Perhaps these are the "New Economy Winners" quote.yahoo.com

To: Bill Harmond who wrote (7008)	5/20/2001 6:58:27 AM
From: craig crawford	Read Replies (1) \| Respond to of 57684

Look what happened to HM during the recession in '82 at the onset of the start of a huge bull market. It bottomed out at 3.62 (split adjusted) 06-21-82 then ran straight to 15 in 11 months. They paid a healthy dividend back then, making it even more of an impressive run up. quote.yahoo.com Fast forward to current times. We are in the midst of a recession (ok not technically) and HM bottomed out at 3.62 (the exact penny) 19 years later 11-16-00. It has climbed to $7.88 (up 117%) friday six months later. Six months after it's bottom in '82 it was up 200%. Another 6 months later it was $15.60 (up 330%) Is HM a double to $15 in the next 5 months like it was in '82? Perhaps this "new economy" will compress the cycle once again and HM will hit $15 in a month or two? Is CIEN going to double it's market cap to $35 billion in the next 5 months and trade at 16-17 times sales? Not likely. Is JDSU going to double it's market cap to $65 billion? Is CSCO going to double it's market cap to $300 billion?? INTC $400 billion?

To: Bill Harmond who wrote (7008)	5/20/2001 8:09:10 AM
From: craig crawford	Read Replies (2) \| Respond to of 57684

Perfect for this thread <g> Who needs new economy? Coal is hot Stocks of now-precious commodity soar on energy woes By Russ Britt, CBS.MarketWatch.com Last Update: 4:51 PM ET May 17, 2001 NEW YORK (CBS.MW) - What company had lower revenue and operating income, lost money the last two years and somehow grew its stock price nearly six-fold over the last 12 months? The answer is St. Louis-based Arch Coal Inc. (ACI: news, msgs, alerts) . The stock hit a new 52-week high Thursday as President Bush announced plans for a new national energy policy. See related story. But what's true for Arch applies to just about any of the handful of coal producers left in the U.S. The sector is in the black for a number of reasons, not the least of which is California's electricity problems that seem to be spreading to the rest of the nation. This sudden, newfound demand for an old-world commodity has tripled coal's price in the western U.S. and doubled it elsewhere. "Something you couldn't give away a year ago you can't buy today," said Michael Beall, analyst for Davenport & Co. "We've gone to a very, very tight market." So Arch, Consol Energy Inc. (CNX: news, msgs, alerts) and Massey Energy Corp. (MEE: news, msgs, alerts) - the nation's biggest publicly traded coal producers - are enjoying huge runups in their stock prices. Arch's stock price stood at $6.58 a year ago and closed at $35.85 Thursday, up 65 cents. Consol traded at $11.25 a year ago and ended up at $39.96 Thursday, down 3 cents. And Massey was $8.77 a year ago, dipped to $7.32 in late summer, and has nearly quadrupled since hitting that bottom. Massey closed Thursday at $27.55, up 85 cents. All three had similarly lackluster financials the past few years, but each is expected to change that between now and 2003. Massey is expected to earn 18 cents this year but $1.78 next year. Consol will go from $1.65 in 2001 to $2.49 in 2002. Arch is climbing from 64 cents to $2.30, analysts say. "The earnings are coming (now) but they're going to explode in 2002 and 2003," Beall said. It represents a breath of oxygen for a sector that had been left for dead by Wall Street. The sector has declined steadily over the last two decades. In the last half of the 1990s, warmer winters, a collapse of the export market and heavy restrictions on coal use all sent the industry into a deep nosedive. A colder winter, tightened supplies, higher energy demand and increased reliance on coal - it powers 51 percent of the nation now - all have added up to steeper prices of the commodity and stock prices for companies that produce it. Coal remains attractive to some because it's cheaper than natural gas by far. Some companies are building coal-fired plants in order to meet rising energy needs. If that's not enough, another company is taking a cue from the dot-coms of the late 1990s and will soon have an initial public offering. Peabody Energy, another St. Louis-based coal firm, is expected to trade shares in coming weeks. Peabody was a public company from 1929 to 1968, after which it began an era under the wing of several owners. That lasted three decades, and it now has come full circle. Peabody officials declined to comment on the impending offering.