TRUE RELIGION 2
TRLG
TRLG announced its Q4 results after the market closing and it was very good. Revenues, operating income, net income all up and it raised its 2006 EPS from 1.20 to 1.25. However, the stock went down in the AH to 19.5 level. Did the market expect more? Probably. At this level, it is traded at approximately 16X of its 2006 EPS, and the company earnings are growing at almost 40% for the coming year. It is traded at deep discount. Is this a fad or an opportunity? Is this stock too volatile to buy? Is there anything I missed? The chart looks decent to me as well. I have a hard time to find anything negative to rat about this one.
SMTS
SMTS on the other hand, had a so-so earning report. The top line appeared a tad light (43% vs. 50% guidance) and the bottomline is in line. The market did not like it and pushed the stock down by 10%. While I am holding my current small position, I did regret that I overlooked the excessive valuation when I first looked at this company. It did raised a red flag, but I brushed it away, partially because I really liked this business (large addressable market, relatively low penetration, virtually monopoly). The high multiple is exacerbated by the ill-timed secondary, which I did not consider necessary. Having said that, I continue to believe the fundamentals remain strong, growth story remains intact, and I believe the chance is good that the company will beat its own guidance in 2006 significantly. I am hanging tough.
TRLG announced its Q4 results after the market closing and it was very good. Revenues, operating income, net income all up and it raised its 2006 EPS from 1.20 to 1.25. However, the stock went down in the AH to 19.5 level. Did the market expect more? Probably. At this level, it is traded at approximately 16X of its 2006 EPS, and the company earnings are growing at almost 40% for the coming year. It is traded at deep discount. Is this a fad or an opportunity? Is this stock too volatile to buy? Is there anything I missed? The chart looks decent to me as well. I have a hard time to find anything negative to rat about this one.
SMTS
SMTS on the other hand, had a so-so earning report. The top line appeared a tad light (43% vs. 50% guidance) and the bottomline is in line. The market did not like it and pushed the stock down by 10%. While I am holding my current small position, I did regret that I overlooked the excessive valuation when I first looked at this company. It did raised a red flag, but I brushed it away, partially because I really liked this business (large addressable market, relatively low penetration, virtually monopoly). The high multiple is exacerbated by the ill-timed secondary, which I did not consider necessary. Having said that, I continue to believe the fundamentals remain strong, growth story remains intact, and I believe the chance is good that the company will beat its own guidance in 2006 significantly. I am hanging tough.
posted by ZIGZAG at 3/15/2006 10:45:00 PM
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