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

To: Paul Senior who wrote (12555)	5/30/2001 1:31:58 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78625

Upping my position in ESR. I've changed my view of it from being a value stock to now being a good speculation. On a value basis the numbers look all right to me. Not a compelling buy now - the stock seems to have made part of its move, but still, I'd say there's room for the stock price to see further gains as a value stock. The price/book is still relatively low, as is the p/sales. Based on Yahoo's coverage, the consensus estimate of the three analysts who follow the stock is for $1.13 this year. That's an estimated p/e of 8-9 given ESR's stock price now of 8-9. biz.yahoo.com From the Yahoo board on the stock, some posters believe that institutional money has come into the stock recently, and that big buying has caused the run up in the stock. The volume of trading does seem to have increased recently. The speculation: We know/believe/suspect/guess that Caterpillar has moved up at least in part because it is strong in building generators/power plant equipment that are/will be in big demand. Am I remembering correctly the recent Business Week picture of these large generators being assembled by workers at a CAT manufacturing facility? Emerson too was previously mentioned here or on Buffettology thread as having a presence in manufacturing power generation equipment. Moving to the next level: Who will install, integrate, and test all this equipment at the customer's site? ESR, for one. biz.yahoo.com This announcement says they have contracts for 3 plants/facilities representing 465 megawatts and valued at a total of $42M. I will guess it's the start of many such contracts if this part of the press release is correct: "The United States Department of Energy's Energy Information Administration reports that 190,000 megawatts of new generating capacity will be built by 2004." Although ESR is a $4.3B revenue company, these future contracts should be substantial and very lucrative. (if I understand how contractors who already have jobs continue to bid high on upcoming jobs, knowing if they get their high bid accepted they move on it, and if they don't they have fallback work. That's how they treat me at the micro level anyway -g-) It's really not a matter of how much of this pie ESR will get and how much will fall to the bottom line or what happens after 2004. It's about the speculative aspect. People are looking to see what companies benefit from the energy problem. They've not found ESR yet (imo). I've searched SI and there's no mention of this company by the daytrader/swingtrader/mo-mo trader/breakout boys or at the energy sites But, imo, a couple of more deal announcements by ESR, another 1+ jump to a new high if more institutions come into the stock, and ESR COULD/MAYBE/MIGHT attract attention and move up soon and quickly to 12 or 15. Or at least to newer highs. That's the bet I'm making now. Paul Senior who doesn't see much downside risk to the stock BUT who also has been very, very wrong in previous speculative plays like this by too quickly dismissing or ignoring or misunderstanding the downside possibilities and probabilities.