To: pz who wrote (13445 ) 2/16/1998 12:08:00 AM From: John K. Culley Respond to of 53068
Paul: The following are my two (2) choices for the upcoming Zstock contest: Short Position....AOL @ 114.25 Long Position....RDRT @ $15.125 Brief F/A and T/A follows....(AOL....America Online) AOL provides Internet online services such as electronic mail, conferencing, software, interactive magazines and newspapers, as well as easy access to services of the Internet (they must be joking). For the 6 months ending 12/31/97, total revenues rose 74% to $1,114MM. Net Income totaled $40MM verses $540MM loss. Revenues reflect an increase in the average number of subscribers, a large part due to their acquisition of Compu-Serve. AOL's book value is only $2.31/share, of which $1.75/share is in cash. EPS (ttm) is $0.51, P/E (ttm) is 224.0, Price/Sales Ratio is 5.72, Price/Book Ratio is 49.4, and they have a low Debt/Equity Ratio of .33. However, their Price to Industry is 169%, a significant premium. Since December, the stock has rallied nicely from $72 to a high last Thursday of $117. Charts look like a longterm investors wet dream. Daily Chart has rising support @ $92 and $107, with overhead resistance @ $120. Stochastics are in the peaking @ 92 & 90, with a climbing RSI @ 75 and Momentum @ 25.3. On the Weekly Chart it has broken out on the top end with the only support now @ $112. AOL has been a strong performer here recently, and the indications are the trend will continue? Perhaps not, with their recent announcement of a $2.00/month subscription fee increase, I believe they are going to experience a huge net loss in subscribers. Besides, I never liked their service and I do like being the contrarian....All the analysts seem to love the stock, it's time to sell it!(RDRT....Read-Rite Corp) Read-Rite Corp. designs, manufactures and markets magnetic recording heads for rigid disk drives. Revenues for the 1st Qtr. ending 12/31/97 were up 4% over the same Qtr in FY `97, but down 18% from the preceding Qtr. Net Income for the 1st Qtr was a loss of $91MM verses a profit of $15.7MM in the earlier Qtr. RDRT's book value is $9.46/share, of which $4.71/share is in cash. EPS (ttm) is ($0.45), P/E (ttm) is NM, Price/Sales Ratio is .62, Price/Book Ratio is 1.59, and Debt/Equity Ratio of .88. However, their Price to Industry is 67.6%, a significant discount. The stock was trading near $32 a year ago and has been in a serious slide since September. Daily Chart has rising support @ $14 and $15, with overhead resistance @ $16, which it has failed to punch through after three (3) times last week. Stochastics are in the trending up @ 68 & 59, with a climbing RSI @ 54.5 and Momentum @ 0.09. On the Weekly Chart it has rising support @ $13.50, with resistance @ $16 and $17.50. Stock has broken down on the Monthly Chart, with initial resistance @ $16. A lot or resistance @ $16, but once it breaks through, we're off to the races. RDRT is another contrarian pick. A stock that has been beaten down for too long and ready to turn around. Of course, these are only my opinions and I've been wrong before. Man, have I been wrong before ;-) Regards, Jack