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

To: jeffbas who wrote (12839)	7/23/2001 11:57:16 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78634

jeffrey bash: SFA - Looking to answer the question: Is this a buy? [No position] I came upon this in 7/20 Merrill report excerpt: <<VALUATION: Does the present share price already reflect near-term growth concerns? As we have highlighted in our initiation report on SFA, our revised DCF value is $27. We do not take this theoretical value as a magic number, however, we do believe the poor growth outlook dictates a more cautious approach. We have downgraded our FY2002 model to fit the current environment, and expect the Company to report an EPS of $1.39, vs. our previous estimate of $1.90. In the mid to upper $20s, SFA trades at a 2002 P/E of 20x, with an almost 18% EPS decline expected in 2002 and almost zero, on average EPS growth, expected in the next four years [OUCH!]. We therefore maintain our Neutral rating and expect no positive momentum in the share price until the Company proves it can rejuvenate growth with new contracts or applications.>> It would appear this is no great bargain at current levels.

To: jeffbas who wrote (12839)	7/24/2001 11:47:20 AM
From: TimbaBear	Read Replies (1) \| Respond to of 78634

jeffrey bash re:CATS....your opinion may prove to be the correct one, only time will tell. I do not put much credence in the activity of insiders, although I know that a lot of folks do. I don't know how much ownership interest that leaves the insiders still holding after the sales. By my following the lead of the insiders, I am in effect, saying that they are better at making the investment decisions than I am. Not knowing them, I'm not prepared to make that assumption carte blanche. CATS has low to no debt, working capital of $1.68, ROA of 44.6%, and Operating margins of 34.1%. While they state in the 10Q that these margins are declining due to lower demand and over-capacity leading to more competition for a smaller piece of the pie, they still seem to be in pretty good shape none-the-less. Admittedly, there is more element of speculation than a true NetNet play, but I believe they provide some margin of safety at current pricing. Differing opinions is what makes the market! Timba