Buying before or after splits is simply a matter of preference. There are plenty of examples of stocks increasing in price before and after. Take for instance TSRI and AND: both increased significantly before splitting. TSRI has remained relatively unchanged since trading at the new split price while AND has plummeted more than 30%. COMPAQ AND DELL both increase nicely after announcing a split but really zoomed through the roof after the stocks actually split.
How a stock will respond all depends on market conditions. In an upward moving climate you can expect a quick spike up. But in a choppy or declining market the stock price may just get cheaper.
I believe SMTC's split is coming at good time. The adjusted price starts trading in mid-January. With the next earning report due about 3 weeks later and the so-called "January effect" I think we will see higher prices. Having said that SMTC is still quite a bargain at current prices. Whether is shows strength next week I don't know, but I'm glad to own it now and will be buying more come January.
Hope this was helpful.
I'm bullish on this company as well, in @ 35.
But why not add shares before the split rather than wait until after? My experience is that price goes up during a split and usually will hold for a bit after - one reason I wanted in before Dec. 23rd. Any thoughts?
Still holding my current position. With the Asian market down today and triple witching I'm thinking more downside. I want to wait to see things settle down abit, plus in Jan SMTC is only going to be cheaper(after the split). THEN is when I really buy.
I agree 100% with the advice about "catching falling knives". In this type market doing so can seriously wound ones financial position.
I also agree that SMTC is worth more than the current market price. However a stock's price is a reflection of what a person
is willing to pay regardless of the stock's true intrinsic value. Once enough people "see" the higher intrinsic value, the
stock will response in a very positive way. At the present time a price below $40 represents a great buy. In the words of Jim
Grant the stock market is like a department store with one major difference�. People want to buy stocks only when prices have gone
higher. Not many search for bargains as they would normally for anything else. SMTC is now a blue light special.
So my plan is to employed your mentioned strategy of buying 1/2 of what you really want and keep buying on weakness to average out a lower cost basis. I've used this system of dollar cost averaging in mutual funds and its has worked quite well.
Thanks for your comments.
True, the technology sector is bearish right now, and downright ugly. I never give advice to friends to buy while a stock is going down. Catching falling knives in the stock market can hurt a portfolio. Normally I would think that to wait a couple days of positive movement before one gets into a stock - like MOT - I am waiting for some positive movement - like 1 - 2 weeks. Semtech is an Up,up,up, down down down, up up down down.
stock. I know the numbers of the company & the management team make SMTC a competent stock. This HUGE drop in SMTC - 25% off
it's recent high of $52, 45% from 52 week high of $72. It's not completely warranted. The P/E ratio is very low from a company
posting this kind of growth. My suggestion - Guess when the Down Down Down is, and buy 1/2 the shares you really want. That way you
can average down, or up with good/bad news. You can't go too wrong - too many people think it's a $60 stock - and at $38 - that
would be a 57% gain - a winner even if it took 2 years to get there.(more like 4 months)
With the Asian flu around the semis will continue to be weak.
After reaching a high of 54 1/2 on Dec. 8, SMTC has lost 32%. Any rally in the stock has just sparked more selling on strenth. Knowing this would it be "safer" to wait and buy SMTC in Jan. after the split when things have stabilized? What is your thoughts?
I feel that at these prices today, It is a good stock price.
I bought another 100 shares at 38 1/4 putting me at:
100 @ 41 1/4
100 @ 48 3/8
100 @ 38 1/4
I'm actually tickled pink about this, an average of 42 5/8 is going to be great when they continue to avoid this asian flu, and show their positive earnings and revisit their 52 week high sometime in 1998 for a LARGE profit. I'm hoping for a 60 - 70% ROI next year. I hope everyone looks forward to that realistic goal.
BTW - Another hammered stock like SMTC that is not in Asia is TKLC or Tekelec. It's at 28 today, but will return to the 40's next month when they report earnings around the 18 - Jan.
- I bought Jan 25 calls - looking for a nice profit.