what is a realistic growth pattern for this company
What can we realistically expect for a growth pattern for NTE. Going back, there must have been high expectations for NTE. Their stock price was close to 6 dollars going back as far as 16 years ago. Here we are again. Back in 2004 the stock price was as high as 40. What do we need to see happen for this to reoccur? Are the same dynamics even possible?
I expect at least a double...beyond that, maybe, but it's harder to say. Let me mention 2 drivers that should make a real difference over the long haul:
A year ago NTE bought back 1/4 of the company when they bought NTEEP. That multiplies earnings going forward.
The Wuxi plant is complete but not yet producing revenue. The Q2 earnings release estimated that it would be making revenue and at breakeven in Q3 2011. If that is accurate, then approximately a year from now we'll have meaningful revenue and perhaps earnings from it as well.
I don't see $40 happening again, ever, unless clueless momentum players jump on board or something. People who paid $40 did it for no reason and got punished.
IMO it's realistic that they might earn $0.50 to $1.00 per year real soon now. IF they hit that EPS, with $5 a share in cash, I think $12 or something is pretty likely. At $12 in a shaky market I'd take the cash.
If the stock turns out to go from $4.50 to $12 in less than a year, who knows, maybe we get bought out by momentum jokers. On the other hand, maybe shorts come and whack us. Who knows?
I guess I don't necessarily see a lot of growth in EPS beyond returning to the $0.50 to $1.00 level.
At that EPS, the ROE would be there for very rapid growth. (Deduct cash from book value & you get about $2.70 capital invested in the business per share. Fifty cents to a dollar is a huge return on that.)
But I wonder about market opportunities. Margins are good for the space, but I'm not sure they're where they'd need to be to buy share profitably by cutting prices.
Just my opinion. I'm playing this as a stock that dipped from $10-$20 to $5 on a bad worldwide recession. I'm betting the recession was the only negative factor and that it's temporary. I'd like to hear from people who have ideas about whether that giant ROE can be put to work. I'm certainly willing to take $25 for my shares instead of $12 -- if I can get it!