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Strategies & Market Trends : The Rational Analyst -- Ignore unavailable to you. Want to Upgrade?

To: ftth who wrote (109)	12/26/1997 12:07:00 PM
From: Scott H. Davis	Read Replies (1) \| Respond to of 1720

[Reply & question on Gordon growth model] Dave, thanks for the detailed response. I had not read his second book, and would be nervous about companies with that low a PS ratio. Did not mean to praise O'Shaughnessy as a market guru, just thought his first book featured some interesting analysis due to the large period of studied years. If I could impose a little more, could you tell me where I can get more info on the Gordon growth model you refer to? I've been doing that sort of analysis on a subjective basis only - a tested model that has refined this process could be very helpful. Rainier, in an earlier post on this thread (I still have not read all yet) you refered to a method of identifying topics clearly as a courtesy to other readers. If there is a post on another thread that gives some guidlines, I'd appreciate it. Thanks for inviting me, from what I've read so far, you appear to have attracted a very high caliber group. Scott

To: ftth who wrote (109)	12/26/1997 1:06:00 PM
From: Scott H. Davis	Respond to of 1720

[Intrinsic PSR vs Market PSR question] Dave & All. I may have one of those outliers you refered to, and would welcome thoughts on why it is currently valued so low. SBEI has a profit margin of 13.2 with a PSR of 1.14, no long term debt, current ratio of 3.66, low price/cash flow, dividing cash/share by price yields a relativly high value. Price/book is moderate - they sold off & outsourced their manufacturing operation so there are not a lot of tangible assets (the outsourcing has contributed to the better margin) No downgrade, no detected insider sales, no bad press. It was one of the stocks in the IBD 70 list posted recently here, and Red Chip Review picked it up this fall. Yet when 4th qtr earnings came out, showing a huge qtr & great year over year & qtr comparisons, SBEI surged from 14 to 18, when a huge selling wave hit later that morning, & combined with the Asian flue & market flight to quality, this micro cap has been hammered since. Any analysis of this would be welcomed - appears to me to be very undervalued currently. Thanks, Scott