I am tempted to buy more, having bought a couple days ago at 10.41. But this already represents 30% of my portfolio!
Just as the market bids up hot stocks on the expectations that their recent great earnings will continue, so too has the market pummeled NLS for a bad year.
I wouldn't buy NLS when it was at $40, nor at $20. But here at $10, its a fine investment.
Could I be wrong? sure! Management could fail to figure out how to maintain decent profitability. But given the experience of the new CEO, the powerful brands that NLS has at its disposal, I really think that this company will be able to earn fair returns on equity from this point forward, expiring patents or not.
The 29% short interest is a great setup for a short squeeze, as soon as some good news sparks this stock higher...
Warnings to you. I lost 10k here when things were looking great as far as the eye could see. You need to check yourself. Here is my constructive comments, if you care.
Continuous warnings downward are bad, really bad. They have a negative earnings growth rate and negative sales growth rate.
New CEO, to me, a bad sign, the guy that got them this far is being replaced by someone who was with Levi's. This is not comforting to me.
Your valuation methodology is strange. You feel that a 6% cap rate (ie 16 PE) is good on this company on a purely valuation basis. You must factor risk because this company is VERY risky. It is currently valued at a 10 PE on $1 projected earnings. If it only earns .75 then it might trade at 7.50 or worse, given the trend. Can your 30% of your portfolio take a 25% hit.
Their best product is almost done. Research the rest of the company and see how comfortable you feel with the finacials. Yes, everyone knows Nautilus, but why couldn't the company ever make money??
Use stops to limit your downside, and do not get caught on earnings announcements as it always gaps down, making your stop worthless.
Just my two cents, I would hate to see someone come in here with rose colored glasses and get creamed pretty quickly. Oh, and the short squeeze has been projected for at least 18 months now.
You may be right, but be careful; when one product companies like NLS hit the wall, it usually isn't pretty.
A great P&L gets ugly quickly when the brand runs out of steam (which I think it may have). Look at how much more they are spending on marketing to generate new sales--this indicates that they having more trouble finding new buyers for machines...with new competitors set to join the fun, it will only get more difficult to find new buyers.
Unless they get a breakout new product and soon, this could be a "value trap." Having said that, at least their balance sheet is good and they still generate cash (for now anyway).