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

To: NikhilJog who wrote (49707)	10/9/2012 4:08:02 PM
From: Paul Senior	1 Recommendation Read Replies (2) \| Respond to of 78744

well are you sure its not a value trap? that was my question. firms can have low P/E and they can keep having that low P/E for 4 years. If you're looking at continued low p/e and saying therefore it's a value trap --- that's not quite correct, imo. If something has a low p/e year after year, that doesn't necessarily mean it's a value trap. For me, I search out such companies. I'm interested as long as the earnings don't seem like they will drop in those future years. Because in those future years, if the earnings do fall, the price (p) will drop (hurting me), and yet the p/e might still stay low. (When I've seen huge drops in earnings though, the p/e has often risen actually. Denominator "e" becomes so much smaller it pushes up the ratio. Even though "p" falls too.) That seems to be the point with WDC, others. There may be a sea change with their businesses, and so people believe earnings will indeed fall -- maybe jeopardizing the company's business or existence. If anywhere near true, the stock(s) could be value trap(s) if bought only on today's low p/e.

To: NikhilJog who wrote (49707)	10/9/2012 6:10:44 PM
From: Brian Sullivan	Read Replies (1) \| Respond to of 78744

They continue to make 95% of the disk drives needed for Data Centers and Web Services. The storage requirements for the internet continues to grow exponentially. The refer to this as TAM: total addressable market in their conference calls. The hard drive remains the cheapest and densest way to store these bits.