SwingTrade Member Forum

[MikeDDKing]

The longer term picture for KTCC is good but I'm not sure about the shorter term situation. The bottom end of their guidance for the next quarter IMO implies a fair valuation of $5-6.50 depending upon market conditions. There is the potential that they miss guidance due to the supply shortage situation as they warned. Thus, there is some downside risk. Also, with the market crashing yesterday, taking profits seemed like a wise idea. My plan was actually to repurchase at $5.50 but that doesn't look likely now. I was surprised at how strong the reaction was to earnings today. I should also temper my short term thoughts with the comment that they seem to underpromise and overdeliver so perhaps I was being too risk adverse.

They do have some big chunks of new business coming online in the next year which will improve earnings significantly. A concern from a longer term perspective is that this is a low margin business where a small issue causing a drop in margins can have a big impact on earnings. Also, this is a cyclic industry but I doubt that is an issue in the next quarter or two.

In short, I try to plan my buys and sells to capture the maximum return in a short period of time. While that is my intent it doesn't always work that way.

I'll be continuing to monitor KTCC as there is a good chance I will buy back at some point.