TRID - What the H@#L is going on?
TRID was my 2007 stock pick.
Here's why:
1. Incredibly strong global demand for LCD/Plasma TVs.
52M LCD Flat Panel sets were sold in 2006 (96% growth)
75M are predicted for 2007 (43% growth)
2. TRID dominates their space with 70% share at each of the majors (Sony, Sharp, Samsung, etc). In addition, they are almost a monopoly in the large panel space which itself has grown from ~40% share in 2005 to 60% in 2006 and predicted to be 75% in 2007. This is largely because of HDTV which offers much better picture and demands a better visual output that only TRID offers.
3. The majors are taking more and more market share from the mid-tier accounst.
These factors have been driving some incredible results for TRID, or so one expects. The problem is that they aren't releasing earnings data for 4 quarters now.
So some detective work is needed.
Sales - 75% growth as of last quarter. It expects $305M~$325M for 2007 (about 90% growth)
Margins - Reported to be constant per the last conference call
Earnings - Based on constant margins, earnings grew 75%
Cash - $190M in cash and adding $22M+ per quarter. They have no debt. That's $4 per share.
P/E - Without an options expense, the P/E is ~20. With the expense, it's unknown. They have declared a $50M non-cash hit and re-statement of earnings for 8 years: how much hits the last year is unknown.
As a fundamental investor, I look for undervalued companies based on sales/earnings growth and stock price. I love seeing a company growing by 75% with a P/E of only 20. And they are cash rich: almost 1/3 of every sale ends up as cash in the bank.
If the market treated this company as MRVL, we would expect a 30 P/E or $30 stock price. And MRVL isn't growing more than 10%. This is a $45 stock any day of the week.
I continue to expect the market to recognize the company for its positives, not its negatives (the options overhang and associated dark cloud like the lack of CEO, etc).
I don't see this as a risk. I see this as requiring much more commitment than I expected. If it takes another year to hit $40, that will be 100% gain over 2 years. I can live with that.
Here's why:
1. Incredibly strong global demand for LCD/Plasma TVs.
52M LCD Flat Panel sets were sold in 2006 (96% growth)
75M are predicted for 2007 (43% growth)
2. TRID dominates their space with 70% share at each of the majors (Sony, Sharp, Samsung, etc). In addition, they are almost a monopoly in the large panel space which itself has grown from ~40% share in 2005 to 60% in 2006 and predicted to be 75% in 2007. This is largely because of HDTV which offers much better picture and demands a better visual output that only TRID offers.
3. The majors are taking more and more market share from the mid-tier accounst.
These factors have been driving some incredible results for TRID, or so one expects. The problem is that they aren't releasing earnings data for 4 quarters now.
So some detective work is needed.
Sales - 75% growth as of last quarter. It expects $305M~$325M for 2007 (about 90% growth)
Margins - Reported to be constant per the last conference call
Earnings - Based on constant margins, earnings grew 75%
Cash - $190M in cash and adding $22M+ per quarter. They have no debt. That's $4 per share.
P/E - Without an options expense, the P/E is ~20. With the expense, it's unknown. They have declared a $50M non-cash hit and re-statement of earnings for 8 years: how much hits the last year is unknown.
As a fundamental investor, I look for undervalued companies based on sales/earnings growth and stock price. I love seeing a company growing by 75% with a P/E of only 20. And they are cash rich: almost 1/3 of every sale ends up as cash in the bank.
If the market treated this company as MRVL, we would expect a 30 P/E or $30 stock price. And MRVL isn't growing more than 10%. This is a $45 stock any day of the week.
I continue to expect the market to recognize the company for its positives, not its negatives (the options overhang and associated dark cloud like the lack of CEO, etc).
I don't see this as a risk. I see this as requiring much more commitment than I expected. If it takes another year to hit $40, that will be 100% gain over 2 years. I can live with that.
posted by Andrew at
5:52 PM
3 Comments:
TRID is a broken stock. I already made comments in the past that you seem to have fallen in love with this stock and do not follow your good stop-loss policy. My advice: Do not try to outsmart the market that tells you "Get Out". MOve on. There are hundreds of better stocks out there.
What happened to the Delisting ?. they haven't filed the fianancial result yet. But still it is listed?. Does anyone know why ?
TRID is a broken stock, but it is important to ask why. This isn't a sales issue like AMD. Or like CSCO - $8 in 2002, $25 in 2003.
TRID is down strictly because of FUD over the options issue and a lack of market momentum.
Both issues are correctable, unlike a sales issue. And, as CSCO showed, when market momentum returns, it returns hard.
Time will tell.
Speaking of time - the deadline came and went and nothing happened! It looks like TRID called the NASD bluff. Also, as part of pre-earnings window dressing, a new HR/Legal VP has been hired to reinforce options oversight.
TRID is back up 4% following Monday's fear based selling
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