I look at 'asset value' and use the market volatility to my advantage. Buy the fear, buy on weakness. GTAT has $418M cash vs $298M total debt.. 2013 revenue guidance between $500M and $600M.. they have the most advanced technology in Solar as well as the Sapphire technology.. at the current price of $2.78 I will scale trade 10,000 shares.. always allowing room for more down side.. the stock just made a 52 week new low with an all-time low of $1.55 per ( freestockcharts and .88 per yahoo historical quotes ) in nov/08.. so 10,000 share in the $2.50 - $3.00 range.. 15,000 in the $2.00 - $2.50 range.. 20,000 in the $1.50 - $2.00 range.. 25,000 in the $1.00 - $1.50 range.. below $1.00- BET THE HOUSE!!! I just made alot of good money on SPWR and SOL playing it the same way.. SPWR was a charm 2nd best stock of 2013 so far!
do whatever you want but the investment premise looks quite wrong here.
Company itself projects cash levels to be down to a little more than $200 mln at the end of this year with debt levels at $260 mln - so cash burn will be around $180 mln this year while the company moves from a net cash to a net debt position.
All 2013 revenues are derived from two-year old backlog with the company still having huge problems to convert backlog into revenues as evidenced by Q1 guidance and the debooking of another $300 mln in backlog. There are just two key figures to watch currently - cash burn and order intake - forget about revenues as the company has been prepaid for a good chunk of it already years ago.
Despite having "the most advanced technology" the company actually doesn't sell anyting currently - even worse their order intake has been negative several quarters in a row after debooking hundred of millions in backlog. New products won't be released until somewhere in 2014 with any meaningful revenue contributions as early as 2015 which will be far too late as the company will ultimately default on its recently amended credit line as soon as June 2014.
4. Scaling in
At least at some point down the road the investment should be reviewed critically as an ever falling stock price would signal much deeper troubles at the company level. Take a look at CEDC where some investors averaged down until the company announced a restructuring which will wipe out 95% of the equity at best. This could and should end up very much the same.
Management's timeline for survival doesn't add up here - the company needs to take in sizeable new orders and related prepayments to avoid a default under its credit facility in mid 2014. Would prepare for some desperate capital restructuring attempts as late as the beginning of 2014 with a highly dilutive debt-for-equity swap proposal to come up.
sounds like YOU should not be buying the stock then.. and I do not average down.. scaling up and/or down is a natural phenomena of trading todays markets.. completely different than averaging down.. so even if the stock is in an uptrend you would be using the same techniques.. and you would also be monitoring the 'fundamentals' as they even change for companies doing exceptionally well.. look at AAPL.. look at NFLX.. you do not fall in love with stocks.. you buy and sell 'positions'.. no drama man, no drama.. drama is for girls.. the assets are their technology.. the execution will be monitored.. but thanks for your negativety just the same ;-)
note I will be adding 5,000 shares 'to scale trade' per every .50 range lower from here.. 'not' adding 10,000, 15,000, 20,000 etc.. so if they can take it to $1.00 I will have 30,000+ share to trade.. I have survived the internet bubble and the financial crisis so I do have a proven track record 'of experience'.. I have been aware of GTAT for a few years and this is my first purchase.. SPWR and MPEL are my two biggest portfolio positions.. I also purchased PBR this .week. Although there are some fundamental and government issues their assets value is way above the current trade value. I have been to Brazil and the country will have the 2014 World Cup as well as 2016 Olympics. The biggest country in South America with tremendous natural resources. I like to get into stocks like this when you know in 12 to 24 months they will double plus. So I believe GTAT at $5.50 in 2014 and PBR at $28.00 is very possible. But we never are 100% sure and that is what make the 'Masters of Wall Street'. Warren Buffet applied the Benjamin Graham theory of buying undervalued stocks. Even though you have to trade the markets in the 21st century those theories still hold true. Just as in I am getting ready to sell my house and the inventories of houses are low. The true appraisal of a house is 'what it costs to build'. Why would you pay more if you could build it for less? Why would you sell it for less than it costs to build? All capital markets are a great experience to study!