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Author: onionrings One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 147  
Subject: Re: Is this stock a bargain ? Date: 10/8/2002 11:34 PM
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Last year I bought this stock at $7.50 and sold half a year later at $23 for a hansome profit. In my opinion it was a bargain at the former price and overvalued at the latter.

The company thinks it's a bargain because they are intending to buy back shares as they did last year as well.

Here's my humble view on the bargain vs. not question:

NOT a bargain:
* The explosive growth phase of DVD adoption is over
* The economy is slow and DVD sales will stagnate
* Too much competition in the DVD chip market thus thin profit margins
* Taiwan is beginning to dump DVD chips on the market

Bargain!

* ESST has been gaining market share in the DVD chip market
* The holiday season is coming up and should be kind to DVD sales
* recordible DVD units are dropping to below the $500 mark, a price level that usually spurs the masses to buy and could start a whole new rash of sales
* a DVD drive in a computer will soon be a necessity rather than an option
* ESS Tech is a player in China the fastest growing economy

Not to mention that they have no long term debt, a nice pile of cash (almost equal to share price as roger118 pointed out), and a bargain P/E level of $4.00!! The market clearly has valued ESST's growth level as negative, even if profit level remain at zero growth this is a good buy. Only if the market gets completely flooded with DVD chips and they become a worthless commodity will ESS Tech suffer along with the entire industry. This scenario is often played out in semiconductors but with ESST's financial strength and growing market share I believe they would be one of the survivors when the blood bath ends. So if you're willing to hold on to ESST for 4-7 years just in case the share price doesn't recover as soon as we hope, I'd venture to call it a bargain at the current price.

onionrings
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