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Strategies & Market Trends : Disciplined Investing, especially the NAIC way -- Ignore unavailable to you. Want to Upgrade?

To: The Philosopher who wrote (434)	3/2/2004 7:56:50 PM
From: EL KABONG!!!	Read Replies (2) \| Respond to of 469

Hi Chris, What figures did you use for growth and for high and low PEs? Re: UTSI... Historical sales growth (as calculated by the SSG) was 77.1% and historical earnings per share growth was 402.6%. Value Line shows revenues growing at 41.5% (estimated) and earnings growing at 48.5% (estimated). I thought that both sets of figures were much too high to be sustainable for any longer than the very short term, so I used an arbitrary 20% growth rate for sales and another arbitrary 20% growth rate for earnings. I can adjust those downward when and/or if it becomes necessary. But for the present time frame, 20% seemed reasonable to me. The SSG calculated the high P/E to be 114.5 and the low P/E to be 22.6, both figures being too high for my more conservative tastes. So, I used a high P/E of 30.0 and a low P/E of 16.0 to complete the back side of the SSG. I selected 30 for the high P/E because 30 is "in line" with the high P/Es of other telephony stocks. (Actually, 30 is somewhat on the low side, but I'm conservative.) I used 16 as the low P/E because the current projected P/E (as shown on the back side of the SSG) is 16.26, and I think that UTSI is currently at or very near a low point in the cycle of the price of its stock. (In the past few weeks, UTSI has twice tested support at or around 32, and has twice bounced up off of that support level.) I also used 1.66 (rather than 1.75) for estimated low earnings/share, and selected 12.2 (Recent Severe Market Low Price) for my Selected Estimate Low Price. I use a 25%/50%/25% split for my Buy/Hold/Sell ranges. The upside/downside ratio thusly came down from 4.9 to 4.4 which is a number I felt more comfortable with. The SSG shows the relative value to be 28.4% and the projected relative value to be 23.7%, again numbers that I take comfort in given that I was conservative all along in the judgement area of the SSG. The bottom line is that I feel amply "protected" to the downside, with a much higher potential upside than is reflected in the SSG, should the estimates from Value Line and other analysts prove to be more correct than my conservative scenario. I was surprised to find it covered by Value Line I subscribe to Value Line, the electronic version, not the print version. I do all of my stocks screens and filters within the Value Line tool. So, if it ain't covered by Value Line, I ain't got no interest in it at all. I was about to say that I seldom invest in stocks that VL doesn't cover Great minds think alike, I suppose... <g> I completely agree with your statement... One last thing on UTSI. I see it as a much riskier stock than ACS. For one thing, most of UTSI's current business is in China, and thusly is somewhat at the whim of Chinese likes and dislikes, and under the auspices of Chinese authorities. While UTSI currently enjoys an excellent relationship with the Chinese government and its citizens, that bonding could reverse itself at a moment's notice should the laws change or should some stiff competition come along. KJC