Click chart to enlarge It always amazes us how little patience some investors have. If you read the message boards, you'd think VECO is going out of business. What's wrong with a stock, or an entire sector for that matter, correcting after months of phenomenal gains? In our view, absolutely nothing. Volatility goes hand-in-hand with growth stocks. As long as a chart stays above its uptrending moving average and hasn't broken down below the bottom of its trend channel, then we really don't care what it does above those lines.
We see VECO as a company poised to experience significant growth through some time in 2012. If we didn't already own it, we would have bought some today. We fully accept that at some point these LED stocks will reach a plateau where their future growth is calculable, and that will end their 15 minutes of fame. But until you personally buy your first LED bulb, don't worry about the LED craze being over. It's already a foregone conclusion (not to mention a government mandate) that every lightbulb in the world will be changing over the next 4 years. It isn't until you're in some random deli overhearing people talk about LED stocks that you should fear their run being over.
The big-picture thinkers, like Peter Lynch, suggest that you should never look at charts with intervals of less than 5 days. That is, charts where each bar represents a week of trading. The logic behind this is that it keeps you focused on the longer term picture, where blips like this are hardly visible.
Buffett would tell you that if you liked the stock yesterday at $54, then you should love it today at $47. How true that is.
Let's stay focused on the big picture and not let the short-term thinkers and window dressers distract us.
22 comments:
Snot, what's your long term view of AIXG? Thanks.
Thanks for the updated chart. Keep them coming.
First of all, AIXG is in the midst of the Euro crisis. Second, it's a thinly traded (low volume), smallcap company with a high current P/E. It is the classic example of a stock that will not do well when there is trouble in the broader economy. Whether or not the troubles overseas reach our shores or not, they are affecting investor sentiment on European stocks.
AIXG was in a stage 2 uptrend for most of 2009. Since November of 2009, it has not been making new highs with the broader market or with the other LED stocks. It has been in a stage 3 consolidation. Stocks in stage 3 will either consolidate before resuming their uptrend, or break down. If AIXG breaks below its lows of approx 26.5, then there is real trouble and we'd let it go. If it has any hope of resuming its uptrend, people will be frantically buying it as it approaches the bottom of its stage 3 consolidation range, which is its lows of February (26.5) If that doesn't happen, then it'll officially begin a stage 4 downtrend, in which case it will start heading towards zero.
here is the problem with led tool makers VECO AIXG..
all these led companies in korea or wherever front loading tools . ordering and ordering.. this quarter coming u p and the next quarter veco will beat of course but estimates are climbing higher and higher and i think analysts are figuring otu order growth will peak. Once one of these guys has a hiccup which could be down the road a stock like VECO will be down 15 overnight.. Even this quarter when they raised nicely the stock was down.. needs patience a real annoying stock to try to daytrade cause you will lose more often then not
i bought eight 14 watt led panels last week to experiment with. the led's are so bright it hurts my eyes to look at them directly. i also bought a bunch of different cfl's up to 45 watts. wow they are really bright.
888888's
Veco has bounced off the 60 ma line on a few occasions, I'm hoping this will be the same. Have my purchase finger ready to fire.
Anon, I think you are correct. Analysts are beginning to think that the future growth of LED is slowing down. AIXG was downgraded today. Read the messages on the AIXG Yahoo board or read the company report. Orders may be reaching a "plateau" or, to put it another way, AIXG may be reaching the end of its "second investment cycle". The numbers for AIXG were as good as those of VECO in some ways. Will VECO hold the 50 and 60 DMA? If not, be careful here. Snot is right that one should not have a portfolio that keeps you up at night. I can't stand too much volatility, so I only get into these mo-mo stocks with a little and for a little bit of time. If any of you want equities, but something tamer, consider VDC which has a beta of about 0.62, contains many dividend paying stocks, and an average P/E of 14. Of the top ten holdings, you have probably bought the products of at least eight or nine of them within the last month.
VDC
It looked like the overwhelming portion of growth for AIXG this quarter was in Asia. Maybe expectations going forward are that Asia will cool down and hurt AIXG's future prospects.
Doubled up on veco at the 50 day ma. Questionable move. I'll carry these shares to the grave if I have to. There's a reason my name is anon...
VECO will tap 40 next week, and then it's time to buy the first 1/2 of your position. If the market broadly corrects you should be able to buy the second 1/2 @ 35, but know that 35 would be a gift and should not be counted on.
Reverse anonymous, at $40 VECO is at the bottom of the channel. At $35 it has broken down. $35 would be time for Leewhtont damage control, aka, "abandon ship," wouldn't it, as VECO heads to orez?
Snotwheel: I'm still following your blog and still holding VECO (and to think that I had concerns that I was getting into VECO a bit late at $34!). I had considered selling when the share price hit $50, but after researching it I realized that the only reasons for doing so would have been primarily emotional, but not very pragmatic since over the long haul VECO still has a good bit of head room left, in my opinion. I agree with your take on VECO; the company is in a very good spot right now and we haven't seen half of the growth I expect to see in the LED industry. Does that equate to VECO profiting in tandem with the LED industry in general? Not necessarily, since one of the primary areas of VECO's growth is in the machines that make the semi conductors for LEDs and, presumably, the profits from these machines will be front-loaded in the overall curve of the LED industry's growth. However, that piece of VECO's business still has a long way to go, in my opinion. As I said, I believe VECO is in a very advantageous position and I expect to be holding my shares for at least another year, and maybe longer.
Still in "anxiously awaiting" mode with Vu1. The company has released very little information so far this year, beyond their 10-K, but I've been keeping in contact with their marketing chief and things are still progressing. They believe they'll have their first product available sometime during the second half of the year. It's still a very risky investment--too risky for Snotwheel--but I'll keep you posted on any new developments. If they succeed at their business plan, we should soon see a point when the risk/reward ratio tilts favorably for investors.
As always, thanks for your diligence and for sharing your efforts with us.
Well, Snot, you're up. Any clues as to what's going on with Veco? I said last week that I was going to lower my position, and instead I wound up selling the whole thing. That was last Mon. morning. At the same time, I opened up a small position in QID, which is about equal right now. My problem is that I started buying Veco and Cree rather late in the game, so am a little more exposed to short term fluctuations. For the time being, I'm satisfied with banking a gain and re-setting the clock.
Cheers.
Sb, we're just hanging in there. The drop was scary as your mind runs away with all sorts of possibilities with what's going on, but we got in early enough to not have had undue stress because of it. It's good to see it doing well today, as it jives with our basic concept that with a forward P/E of 15, it shouldn't be plunging forever. We're just exercising patience, but totally understand how a higher buy-in price coupled with a drop like that could trigger someone to exit the position. You did nothing wrong. For the next "hot" stocks, we'll try to help get you in sooner so you'll be able to ride the waves with less stress.
Snot, i initiated a position on VECO at 44.50$ on Friday afternoon.
Here is an article from streetinsider that explains why VECO is up over 10% today.
http://www.streetinsider.com/Analyst+Comments/Veeco+Instruments+%28NASDAQ%3AVECO%29%3A+Buy+on+Weakness,+Short-Term+Profit-Taking+Provides+an+Opportunity+for+Long-Term+Investors+-+J.P.+Morgan/5585433.html
I am also long SKF at 17.30$ as a hedge on a quick market drop.
Curious to see if VECO pops above the top channel line, or if today will be considered the top and stay inside
Here's JP Morgan's view on VECO...
http://www.streetinsider.com/Analyst+Comments/Veeco+Instruments+(NASDAQ%3AVECO)%3A+Buy+on+Weakness,+Short-Term+Profit-Taking+Provides+an+Opportunity+for+Long-Term+Investors+-+J.P.+Morgan/5585433.html
Perhaps it's the same article as you posted a link to, Chomp. By the way, nice buy at 44.5
Looks like CREE is breaking through the 50MA. Any thoughts on that SNOT? Buy or short?
That bit of QID I bought a couple days ago came in very handy today. I guess that would best be described as educated luck. I went ahead and sold it towards the end of the day, in keeping with my maxim of banking easy gains (in this case, just under 6%). I also slightly increased my position in VECO at the same time.
It will be very interesting to watch the market in the next week or so. The VIX is moving up. Europe is having to finally face the music. The domestic market has had an extended run. What will that mean for VECO, CREE, AIXG, etc.?
Snot, how about another of your dandy charts vis. VECO?
Thanks
Another bounce off the 50 MA this morning on VECO, yikes
Snot, what is your current valuation of AIXG based on their recent earnings and the correction. Word from some was that their P/E was about 22. Is that close to accurate.
Not sure what AIXG's EPS is, to be honest with you. Overseas stocks are going to continue to stay under pressure as long as there's uncertainty about how deep their crisis really is. We're just hoping that the U.S. market doesn't give in to the pressure too much.
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