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Mentor Graphics Corp. Message Board

  • musicmoney95 musicmoney95 Sep 6, 2012 10:36 PM Flag

    Look at this recommendation

    Mentor Graphics is ‘Buy of the Week’: AAII’s Rotblut
    September 4, 2012, 5:59 PM

    Strong revenue growth and heightened demand that, as yet, has not been recognized in the stock price has Mentor Graphics poised for a significant gain, enough for Charles Rotblut, editor of AAII Journal, to make it his “Buy of the Week.”

    Appearing on MoneyLife with Chuck Jaffe, Rotblut said Mentor Graphics MENT recently reported adjusted second-quarter profits of 21 cents per share, four cents above analyst estimates and up from 11 cents in 2011. Revenues were up nearly 13%.

    ‘This is one of those stories that, a lot of times, you don’t hear about it until the stock has made a huge move, and then you are finding out about it after the fact when valuations have become stretched,” Rotblut said. “That’s not the case [with Mentor} right now; it’s valuations are still reasonable.

    “You are getting this company early enough in the cycle where there is the potential for the stock to make a big run, and you are getting in at a good price.”

    Mentor trades at 14.5 times trailing earnings, Rotblut noted, a significant discount to the median 23.8 for the software/programming industry, and even the semiconductor median of 20.2. Whether you think of Mentor in one business or the other, Rotblut noted “there’s a big disconnect there.”

    “You could see the possibility for the stock to rise as much as 40%,” Rotblut said. “I like to be more conservative, and we can assume maybe it gets halfway in between, but you are still looking at a good 20% to 25% increase if you assume the stock bridges some of the valuation gap but not all of it.”

    You can listen to the interview at money life show

    -Chuck Jaffe

    Sentiment: Buy

 
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