Thursday, December 09, 2004 8:51 a.m. EST
Dear Subscriber to TheStreet.com Stocks Under $10,
Wednesday we offered a list of five low-priced stocks
that we believe have the potential to make big moves
between now and the end of the year. This morning, another
notable low-dollar stock, telecommunications equipment
play Ciena (CIEN:Nasdaq), is on the move, and we want to
share with you what has changed for this down-and-
out optical transport play, and why we think it should be
added to that list even after making a 10% move higher to
$2.77 a share in pre-market trading.
This morning Ciena announced better-than-expected fourth-
quarter results, with its loss of 6 cents per share
beating the Street consensus by a penny. In addition,
first-quarter sales guidance of $87.7 million to $90.2
million is well ahead of the forecasts' $81.6 million
estimate. In its earnings release, Ciena CEO Gary Smith
said that, in the short term, he expects customer spending
patters to drive revenue growth 7%-10% higher sequentially
in the first quarter.
The strong quarter, combined with the company's solid
balance sheet that can weather short-term capital spending
lumpiness, gives us the confidence to back this volatile
stock that we would normally let go by the boards. (We
aren't adding the stock to our portfolio because we are
fully invested right now, but we will keep it on our
screen for the time being.) At the end of October, Ciena
had close to $1 billion in cash and short-term investments
and a book value of more than $3 a share. In other words,
you are getting a potential double digit top line grower
for less than its break-up value. In addition, the company
is reducing operating costs and its gross margins are
rising, reaching 29.5% in the quarter from 24.9% last
quarter.
It's been a rocky ride down this year for Ciena. The stock
traded as high at $7.97 a share back in January, but a
couple of quarterly hiccups turned the Street negative on
Ciena in a hurry and the stock hit a low of $1.67 as
recently as August.
There has been talk that Ciena could be a takeover
candidate with its low valuation, but the company is still
integrating a lot of different acquisitions and this makes
the potential takeover scenario less likely. But the
Street hates this stock with a passion, but one or two
good numbers should push its shares back toward $5 a
share, or 1.5 times its book value.
Today was one good number, but we would expect the move
higher to fade when some of the 27 analysts who have hold
or sell ratings on Ciena remind the Street how bad they
think this company is. However, one more good number could
force a lot of peoples' hands, and we believe a stake in
Ciena here represents a lottery ticket that has better
odds than recent speculative movers like Genta
(GNTA:Nasdaq) or CMGI (CMGI:Nasdaq).
Regards,
The TSC Investment Team
Send email to stocksunderten@thestreet.com
David Peltier and William Gabrielski, writers of
TheStreet.com Stocks Under $10, are research associates
at TheStreet.com.
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Enviado: 10/12/2004 16:02
....
perdi este salto da CIENA por acaso tenho que fazer as contas se andar para aqui a apanhar cada onda compensa a uma estratégia de Buy and Keep logo se vê ...
, parece que ficou ainda com força( no after andou nos 90/91).
hoje é dia de falar de assuntos mais sérios para vos dizer que a CIENA tal como tinha previsto lá está a mostrar toda a sua força 