Asif Suria

Sterlite Industries: Taking Advantage of the Dip

Interesting observation Andyn. Given all the legal issues around Asarco, I would personally prefer the deal not go through.

According to their annual report, they had $3.9 billion in cash and short-term investments. A $50 million break-up fee does not change things a whole lot.

I agree with you that there are usually no free lunches in the market but we are in highly unusual times right now. The stock was originally dragged down when the India bubble burst in Jan, then the drop in commodity prices, then the rather complicated restructuring that they thankfully abandoned and now by a global financial meltdown. It looks like this stock just could not catch a break since the start of this year.

The stock was trading at $26.32 when I added it to my watch list on Jan 4th and I finally got in after it had dropped over 82%.

Can it head lower? Sure. But the risk/reward comparison at these levels makes Sterlite a compelling buy at these levels in my opinion.

www.sinletter.com/watc...