Wednesday, May 26, 2010

SPWRB now extraordinary value

I feel compelled to follow up on my post on SPWRB from two weeks ago.

At that time I argued that the shares represented an excellent value. Now the shares are trading at $9.60/share--down 20% in just two weeks, with no change in fundamentals, I have to say they represent an extraordinary value.

The P/E on projected 2010 earnings is now 6.7; on 2011 the P/E is 4.5.
The P/S on projected 2010 sales is now ~0.5. The price to book is about 0.8.

I freely admit that I don't understand why the shares have sold off 50% in 3 months. But the sell-off is way overdone and the value is there. Soon investors will see that all the downside (and then some) has been priced into the shares and then a strong rally will ensue.

In my experience shares always fall lower than expected and then proceed to rally sooner...


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