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Educational post 2: Beware of someone with poor past judgement

|Includes: KEMET Corporation (KEM)

An Undiscovered Growth Stock
Posted by: stockdocx99: Date: Oct 11, 2007 12:04am

KEMET [NYSE:KEM] Oct. 10th closing price = $7.41

Kemet is one of the largest manufacturers of capacitors, components needed for virtually all electronic products. KEM's profits and share price surged in the boom tech year of 2000 with EPS of $4.05 and a share price that reached $44.20. Losses in 2002 - 2004 followed and KEM shares fell out of favor.

Since regaining profitability in 2005 with EPS of $0.21 things have continued to improve. Earnings doubled in 2005 to $0.42, then grew 31% in 2006 and are projected to hit $0.55 for the FY ending March 31, 2008. Concensus estimates for FY 2008 are now $0.67 /share. KEM shares have yet to reflect this good news.

At $7.41 these shares trade for just over 11X FY 2008 estimates. They are only 1.1X book value and are at the lowest price/cash flow since late 1998 [the Asian Contagion period] when most tech stocks were badly battered and about to rebound brilliantly.

Value Line looks for these shares to command a 20 multiple over the 3 - 5 year period. Using that P/E assumption I can see a share price of $13 over the next 12 - 18 months. Possible? Reasonable? KEMET has traded at prices of $9 and up in each of the past 12 years. Only 3 of those years had earnings higher than are expected for next FY. Even a partial rebound to $9 would mean gains of over 21% from yesterday's close.

At just 11.1X forward earnings and very low p/bv and p/cf I'm a big buyer right here. Three solid years of growth with more good news expected. If KEM shares hit my real target of $13 it will be a 75% profit. Even if it should take 2 - 3 years that's a nice annualized return.

Risk? Not too much. The absolute low prices on these shares have been $6.10, $6.90 and $6.40 in 2005, 2006 and 2007 respectively.


This stock is now on the pink sheets and read the last paragraph written by stockdoc alias misty b alias melissab alias  Paul Price

Paul no offense but your idea of measuring risk is poor.In the 5th pargraph you said you were a BIG BUYER here


See why this man tries to discredit me and has given me over 700 thumbs down?

Is it possible he is upset with the fact that I know he is a fraud?

I report you decide .peace