recent market activity has proven to me that it is a good environment for value investors - especially for many technology stocks that are selling at unprecedented low prices – some are even lower than what they were in 10/02.
affx, opwv, cree, vrsn, cybx, cogt and wbsn are such stocks that i believe are extremely undervalued if you view them in a 2-3 year time frame. cybx, in my opinion, will be bought by a larger medical device maker if the stock does not recover soon. wbsn is extremely cheap if you value the stock with ev/fcf (enterprise value/free cash flow) ratio. wbsn will generate enough cash in the next 3-4 years to retire all the outstanding shares if we assume the same level of cash flow and zero growth. wbsn itself may pass the rapid growth stage but if you simply value it as a cash cow, the current stock price is still an absolute steal. i believe the stock is in a distribution phase – value players are replacing the original growth crowd thus the stock price may be very volatile in short term. the company itself is using the extra cash to buy back shares.
investors are fleeing from high-beta stocks (mostly bio and tech stocks) to play defensive in a possible economic slowdown. the market’s focus is on anything negative. sooner or later people will change their mood from fear to greed and realize that things are not as bad as they thought and start to buy stocks again. i have no idea when this will happen but it will probably happen sooner than most of us predict.