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Nautilus Inc. Message Board

  • gandalfthewiz30 gandalfthewiz30 Apr 10, 2003 1:21 PM Flag

    People, why buy a company

    with declining sales, declining earnings, poor management? You short these companies.

    Buy companies with GROWING sales, GROWING earnings, good management.

    A low PE is not a reason to buy a stock. More often than not, it is a reason to short a stock. Good companies have HIGH PE's, poor companies have LOW PE's.

    Ex. DELL is a good company has a HIGH PE.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I don't know about Dell, but you are 100% correct about not investing in cos. with negative growth. I owned NLS off and on for several years, but haven't owned it since the sh-t really started hitting the fan about 6 months ago. With this SERIES of guidance lowerings and obvious managment missteps, I wouldn't touch it with a ten-foot pole. Sadly, some amateur investors get emotionally involved, making an investment into a "cause" - which usually results in calamity. This co. is obviously on a downhill track. Unfortunately for them, those who fall in love with a stock are beyond reason.

      • 2 Replies to lestah
      • "but haven't owned it since the sh-t really started hitting the fan about 6 months ago"

        I've invested in many companies that demonstrated a decent track record over a period of years (1999-2002 were fine for NLS) and then ran into trouble for 12-18 months and that eventually recovered much of their old performance. The trick is to understand if the trend if temporary of permanent�six months is hardly enough to establish a permanent trend. You have to also look at the context of the market and the geopolitical issues many consumer related companies are having a tough time and NLS is still making a good profit albeit less that last year. I am betting that 6 � 12 months of backsliding is not a permanent condition for NLS. They are still likely to make $60 million in operational cash flow in 2003. They have a decent stable of products in a field that is growing�the fitness sector. Granted their cash cow is starting to age and will loose patent protection soon but it still has life left in it and the management knows how to market these products and earn 20%+ operating margins. Companies rarely go from great to gone overnight. There is a strong chance IMO that this stock will get back to $15 in the next 90 days especially given the level of short interest.

      • lestah allows as how he "don't know about Dell, but you are 100% correct about not investing in cos. with negative growth. I owned NLS off and on for several years, but haven't owned it since the sh-t really started hitting the fan about 6 months ago."

        Translation:
        "I bought at $40, sold at $30, bought at $25, sold at $15, and no way am I gonna buy now, they can't trick me!"

    • Other companies that had high PEs: LU, GLW, JDSU, NT, TLAB. Wow, gotta love those great stocks! Some of them are worth more than 5% of their peak prices now!

 
NLS
14.43+0.13(+0.91%)Jan 27 4:04 PMEST

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