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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Will Lyons who wrote (53607)	10/2/2001 10:55:51 PM
From: StanX Long	Read Replies (1) \| Respond to of 70976

Can you provide a few names ? :0) Stan

To: Will Lyons who wrote (53607)	10/2/2001 11:16:45 PM
From: John Trader	Read Replies (1) \| Respond to of 70976

Will, Jerome is right that the large caps are much safer, but I think it is possible to weed out most of the small caps that have the very high risk to reward ratios. If you figure out how to do this, however, let me know. One thing I find interesting is all the companies selling at below cash value with no debt. Barrons did an article on this recently. In theory a company could buy them out, take the cash, and close them down and make a good profit from that. As one example, COSN is trading at $.35 but has virtually no dept and $2.11 in cash (per Yahoo). I am not sure exactly why, but I think many or most of these stocks are bad investments here. Maybe somebody else can explain this. I am guessing most have a high "cash-burn" rate (e.g. COSN does). If they can not be bought out for some reason, and the company will just keep loosing money, then the low share price makes sense. One small cap that looks interesting to me is NEWP. They supply equipment that other companies use in making fiber optic related products. I already have a position in this one. It has no debt, trading at $13 and change, has over $7/share in cash, still has earnings, and has very good P/E, P/S, P/B, and PEG ratios. In this case it seems the market is betting those expected earnings will dry up, since the fiber optic companies are going through hell during this downturn, and since nobody knows how long this will go on. They had a backlog, so that helped them out so far. Or maybe I am missing something. It seems cheap to me, but certainly added risk because of the size of the company and the industry they supply to. I noticed somebody here on the AMAT thread bought some of this recently, but I don't remember who. It seems there are two conflicting theories right now. One says to stay with the big-cap survivors, given we don't know how bad or how long this downturn will go on. The other says, as you point out, that most small caps are much cheaper, and therefore should outperform on the way up. Actually, there is a third theory - the one that says that we are going much further down from these levels... John