TIE

Consider this.
Speculation drove a lot of stocks up and just as quickly ran away. or so it seems.
Look at PCU, a copper supplier. Copper is a material that is actually used, unlike gold and silver. It is more a reflection of the global economy than investment alternatives like the pricier metals.

PCU Hit $110 before the market sell-off, settling down to $74 yesterday. That is the same price in early february. Essentially, the market eliminated 4.5 months of price. A 33% hit in total.

TIE hit $48 before falling to $31 yesterday. Also a 33% drop from the high. But an important difference is that this drop reflects only a 6 week price erosion.

But while Gold spot prices dropped, Titanium spot prices did not.

This is why I like TIE - it was speculated into orbit only recently. The speculators left but a lot of hard-core investors remain. They believe in this company. I own 50 contracts - the TIE Dec $40.

But is it worth a 32 P/E? Several things are at play. First is the ongoing migration to higher prices. TIE depends on long-term contracts, only some of which are consistent with current world prices. That means that margins will continue to grow as higher ASPs can be charged. Next is the world pricing. It isn't coming down. There is no spot pricing - long term contracts have locked in all supply. In the event that oversupply emerges, then the long term buyers will buffer for a while, discretely dumping excess on the world market. That will be first sign.
But that isn't happening.
What is happening is that TIE is building a new sponge factory which will increase sales 50%. if they can do that AND prices stay somewhat stable, then they deserve a high P/E today.

That more long-term contracts are moving to move to the much highe rprices, the average ASPs will rise