NC180570

Playing the Next Bear Market Rally

Hello Arnbjorn and thank you for a very informative posting.
You say that:-
"A sensible way to play this bear market rally is to take a long position now and to close it when the indicator flashes a sell signal. My intention is to do just that, as well as sell some other stocks when the rally runs out of steam. That way I will have enough dry powder to take advantage of even better buying opportunities that I expect to materialize next year"

Question: The "long position" you refer to, is it SPY or the Q's or what? Also, how much of your portfolio would you invest in this position?

Thanking you in advance NC180570 Ireland

GeoEye Imagery Now on Google Maps

Hi, looking at the following piece of research from Market Grader, according to them GeoEye trades at 1.86times book value. It makes GeoEye sound less attractive than saying it trades at less than the cost of one of their satellite's. Also it says that GeoEye trades at 93.81 times its latest quarterly net income (including depreciation), representing an exceptionally rich valuation. Just an observation.

Acceptable Valuation Indicators - GEOY trades at about 4.16 times earnings per basic share (excluding extraordinary items); this compares very favorably to the MarketGrader-calculate... optimum PE ratio of 28.2, based on a historical 14.99% EPS growth rate, suggesting the stock is significantly undervalued. Our optimum PE Analysis assigns each stock the highest possible valuation afforded by its long term EPS growth rate; this historical growth rate measures the average year-to-year change in earnings per share for the company's last eight quarters (when available). Considering the company's revenue growth appears to be slowing down, cost cutting measures are necessary to maintain good levels of profitability. The stock trades at 1.86 times tangible book value per share (tangible book value is based on the company's common equity minus intangibles such as goodwill); this is an attractive valuation were management to undertake steps in an attempt to unlock the true value of assets on the balance sheet. It trades also at 3.67 times cash flow per share, a sign that investors are assigning relatively little value to the company's non-cash assets and its earnings potential. GEOY trades favorably at 1.71 times trailing 12-month sales, a 57.92% discount to the Diversified Commercial & Professional Services industry average price to sales ratio of 4.07. The company's market capitalization of $310.88 million is 93.81 times its latest quarterly net income (including depreciation), representing an exceptionally rich valuation.