Timely reader comment
A comment from today’s earlier post, not really related to the post but very pertinent to what I do here:
Susan Calhoun writes:
What is going on with KHD? You were so positive on it but the stock has dropped a lot. Do you still think that it is a good investment? Thanks.
Times like these can be tough on stocks like KHD (KHD: 13.70 -0.20 -1.44%). It is a small cap stock with no following in the U.S. Most of the investing world does not even know what they do and they just sell away. In the meantime there is no positive news to give some support to the stocks price.
I am finding these stocks do well for about a month after earnings release as a few more learn about the great story and growth. As the quarter progresses, interest wanes and the stock price will stagnate or fall, depending on the overall market. There is absolutely no news that affects the stock, we just have to wait until the next earnings release.
One technique to own stocks like this and another in my portfolio, Gigamedia (GIGM: 3.11 -0.11 -3.42%), is to have a core position to hold through down times and adding some to your position when prices drop and selling that part when the stock recovers to recent highs. I recently added to my GIGM position with the plan to sell that portion of the holding when the stock recovers to $20 or so.
These two companies, KHD and GIGM are growing earnings at 50% plus per year with no foreseeable end to the growth. I am sure the stock price will follow at some point in time. KHD should release earnings around the middle of August and we will again get a picture of how the company is doing.
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