Yes, LEDs are great products these days, but can you say "widely-available commodity"? Soon, the glut on the market will be immense.
With operating expenses, especially Selling, General and Administrative, going through the roof to support their additional sales during the past couple years, hopes of economies of scale and sizable margins from product differentiation are looking pretty dim for this lighting pioneer, unfortunately.
Sorry, bur for cutting edge products their net margins still suck. 39 cents a share for a "solid quarter"? That's a forward p/e of 30, and I'm sorry, their tepid growth in earnings just doesn't warrant that multiple, new products notwithstanding.
On second thought, given the fragile and quickly eroding retail environment, I'll stick with the mid-twenties value proposition I expressed below a month ago.
Sentiment: Strong Sell
A forward p/e of 30 (not unreasonable on a PEG basis) if that 2016 forecast holds firm into next year would put GTAT at $90 per share by then. Holding shares of this gem is a no-brainer. Long and strong.
Sentiment: Strong Buy
Maybe this is all a matter of semantics, as far as the word "wrong" is concerned. Apparently that's an emotionally charged term for some. In this context, it's really encapsulating a math equation, in which supply and demand vary according to prior performance and perceived potential. De facto, those individuals who are most heavily weighted in a stock which outperforms the market by a large margin, during the greatest percentage of its extraordinary upward trajectory, will reap the largest rewards.
I see you're not getting the concept. It can be a bit difficult to wrap one's head around. Here's my best shot at explaining it:
A stock will be bid up (or down) in price according to the general investing public's expectations of the company's future earnings growth. If the public is not "wrong," in other words, most of them expect the huge amount of growth over the coming years that actually then does occur, you will have to pay a great premium to get those shares now, because lots of people will want them (that's the basic supply and demand of the marketplace). This premium will of course limit your gains very dramatically compared to the gains which would accrue for you if that stock was available much cheaper because the company's great success wasn't expected by many investors. In other words, most of them were "wrong."
Now there's no problem owning solid blue chip stocks that continue to grow earnings over the years. But that earnings growth, and the resultant stock price growth, will by definition not be "oversized" or extraordinary. It will be, in effect "the market" itself, and the gains will be average.
However, it's precisely this "stupidity" which causes what Buffett refers to as the "mispricing" of securities. That "error" is what enables those of us who think we know better to profit by buying low and selling high. A good truism is that for oversized gains to be possible in a stock, most investors need to have been wrong. This doesn't just happen once at the lowest price of a stock, of course, but constantly during the zig-zag course of its rise.
In the short term, the market is a voting machine. In the long term, it's a weighing machine. But the market is never stupid. It just IS, like earthquakes and spring showers.
Umm......I care, and fully expect to be rewarded handsomely for my ongoing investment in this great company.
Sentiment: Strong Buy