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Strategies & Market Trends : Due Diligence - How to Investigate a Stock -- Ignore unavailable to you. Want to Upgrade?

To: Don Pueblo who wrote (80)	3/30/1999 2:11:00 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 752

I sometimes find really useful info in analyst reports. For example, I recently looked at USG, the Drywall producer. In light of published reports of shortages of wallboard, the product being on allocation, and prices rising, why was USG selling at 7-8 times earnings? Obviously the market felt this was the top of the cycle and earnings would decline from here due a slowdown in building [Despite no signs of that occuring] or new industry capacity [coming, but a ways off] Anyway, Merrill's analyst J Goldfarb, with 30 years experience with these cycles, says the stock doesn't peak until earnings peak and that's a ways off, perhaps quite aways. Data is presented to support this. If Dram were on allocation where would Micron be? On the moon IMO. So with Goldfarb's perspective I'm long and perhaps the market agrees, perhaps not...that's sometimes the problem with fundamentals... may not matter in a momentum market.