Message Font: Serif | Sans-Serif
No. of Recommendations: 3
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


* 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.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.