SHOT THE HIGH-FLYERS
CUTR
CUTR has a good quarter, but the guidance for Q1/06 is slightly conservative, particularly in the revenue growth. The stock is down by about 10% in the pre-market (26.75). This might be a bit over done. There potentially is some panic selling this morning. At 26.75, valuation is becoming reasonable by itself (in view of its strong growth) and extremely cheap compared to its peers, although the theme of this quarter has been “shot the high-flyers�. There is a reasonable chance that it will make the low of the day and bounce. The near term tone of the overall market might help as well. However, this is not a stock to “buy and hold� as the risk of potential litigation is simply too great. Moreover, the whole sector is losing steam and I expect the multiple will continue to contract.
STP
STP is also down by about 10% this morning. This one is more difficult to see, mostly because it is very expensive (about 70-80 times of its 06 earnings). However, this is a favorite of the momentum and it is the fad of the moment. My gut felling is that it will decline a bit further from here simply because there is quite a bit of profit out there and I assume momentum players would want to take it before it vanishes. It is also consistent with the theme of the quarter, i.e. “shot the high-flyers�. Having said that, I probably would not want to pick a fight with dip buyers.
CUTR has a good quarter, but the guidance for Q1/06 is slightly conservative, particularly in the revenue growth. The stock is down by about 10% in the pre-market (26.75). This might be a bit over done. There potentially is some panic selling this morning. At 26.75, valuation is becoming reasonable by itself (in view of its strong growth) and extremely cheap compared to its peers, although the theme of this quarter has been “shot the high-flyers�. There is a reasonable chance that it will make the low of the day and bounce. The near term tone of the overall market might help as well. However, this is not a stock to “buy and hold� as the risk of potential litigation is simply too great. Moreover, the whole sector is losing steam and I expect the multiple will continue to contract.
STP
STP is also down by about 10% this morning. This one is more difficult to see, mostly because it is very expensive (about 70-80 times of its 06 earnings). However, this is a favorite of the momentum and it is the fad of the moment. My gut felling is that it will decline a bit further from here simply because there is quite a bit of profit out there and I assume momentum players would want to take it before it vanishes. It is also consistent with the theme of the quarter, i.e. “shot the high-flyers�. Having said that, I probably would not want to pick a fight with dip buyers.
posted by ZIGZAG at 2/14/2006 09:20:00 AM
0 Comments:
Post a Comment
<< Home