BCSI - Story of a Drive By Mugging
BCSI was $52 and now is $40. This stock was mugged
Who, What, When, How? And most importantly: Why??
First, the Clues.
Revenue: +67% Y/Y
Earnings: +350% Y/Y
Let me repeat that: Earnings are up 350% from $1.1M to $4.7M per quarter. That's $0.02 per share more than expected
Future Demand: Looks sparkling. Many top companies are now customers.
Future guidance: even higher earnings
Time to bail? Quite the opposite. Consider this:
Q4 '04 EPS $0.02
Q1 '05 EPS $0.22
Q2 '05 EPS $0.27
Q3 '05 EPS $0.28 (just released)
With one quarter's earnings release, their PE dropped from 91 to 63 (at $50 stock price). Now the P/E is 50.
Assuming that their guidance is correct and earnings will be $0.32+, in one quarter the PE will be 37. That is reasonable for a company delivering earnings growth of 350%.
They got clobbered by high expectations and a recent pre-earnings run up. Don't be fooled - the stock drop returns them to their pre-earnings trading level of $40. This is a great buy opportunity.
PORTFOLIO MOVES
We set the Stop limit and sold at $46 (if memory serves). I propose to buy back at the current trading price of $39.50. That would look like this
Sold: 200 shares * $46 = $9200
Buy: 233 shares at $39.46 = $9200
Remember this: small cap stocks that are fast growing are more volatile. You need to stay with them as long as they are meeting/beating earnings growth targets.
Who, What, When, How? And most importantly: Why??
First, the Clues.
Revenue: +67% Y/Y
Earnings: +350% Y/Y
Let me repeat that: Earnings are up 350% from $1.1M to $4.7M per quarter. That's $0.02 per share more than expected
Future Demand: Looks sparkling. Many top companies are now customers.
Future guidance: even higher earnings
Time to bail? Quite the opposite. Consider this:
Q4 '04 EPS $0.02
Q1 '05 EPS $0.22
Q2 '05 EPS $0.27
Q3 '05 EPS $0.28 (just released)
With one quarter's earnings release, their PE dropped from 91 to 63 (at $50 stock price). Now the P/E is 50.
Assuming that their guidance is correct and earnings will be $0.32+, in one quarter the PE will be 37. That is reasonable for a company delivering earnings growth of 350%.
They got clobbered by high expectations and a recent pre-earnings run up. Don't be fooled - the stock drop returns them to their pre-earnings trading level of $40. This is a great buy opportunity.
PORTFOLIO MOVES
We set the Stop limit and sold at $46 (if memory serves). I propose to buy back at the current trading price of $39.50. That would look like this
Sold: 200 shares * $46 = $9200
Buy: 233 shares at $39.46 = $9200
Remember this: small cap stocks that are fast growing are more volatile. You need to stay with them as long as they are meeting/beating earnings growth targets.
posted by Andrew at
6:54 PM
2 Comments:
I wholy agree with this. I have gotten stopped out of BCSI 2 times in the past few weeks, but think my stop loss was a little to thin. Looking at everything again, I am thinking of a SL at around the $20-$25 area. What are your thoughts on this?
BCSI is young and the market has yet to catch on to them
Post a Comment
Subscribe to Post Comments [Atom]
<< Home