An interesting possibility for a long term -- I stress long term -- buy sometime iin the not too distant future might be Lucent. LU.
Had a horrible 2001. Is doing the fudge of talking about "pro forma" earnings. Which means we're in trouble.
Which they are -- stock down below 5.
BUT, the earnings seem to be turning around. They may not have positive earnings for 2002, but by 2003 may be finished restructuring, dumping the unprofitable businesses, and making money off what Bell Labs, still an impressive operation, is churning out.
And they have cash of about $.90 per share, debt isn't out of control (28% of capital), book value about $3.12. Dividend, if it holds up, and I think they'll try to keep it up if they can and they have the cash to cover it, adds a bit. Not a lot, but something. And they'll probably try to put the dividend up to .08 again as soon as they think they can, which will give a small pop to the stock price.
If you consider that in 5 years they could be back to earning 75 cents a share, and if the PE holds at about 25, you're looking at at $18.75 share price. At about $4.60, which it is now, that's a four-bagger. For old folks looking for fairly low risk growth, it's getting interesting. Or for an IRA.
Anybody have other thoughts on it?
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The cheaper the paper, the more important the information. Peter Lynch.
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Price is a crazy and incalculable thing, while Value is an intrinsic and indestructible thing. G.K. Chesterton
