Stock question?

I read about them daily, they seem like a solid co. with enough leadership/direction to keep a strong business. Not sure about their numbers but it has a rep of being a good company.

 

If LU goes through $5, the mutual funds that have low-priced securities covenants will start buying it. A lot of funds have stipulations that do not allow the purchase of stocks below $5. Once the larger institutions step in it will drive the price higher. I'm still buying it here, for myself and my clients.

 

I remeber when lucent spun off of AT&T years ago and was trading at over $100... how times have changed

 

Hopefully he didnt get in before it went down 1000's of percent a few yrs ago! Tell him to hang on to it for a little longer. They just got a DoD contract recently. check yahoo biz for the article.

 

i was a '40 act attorney for many years, we managed $300 billion, and i've never heard of such "covenants". not saying they don't exist, just interested in seeing the prospectus language. price per share has little to do with a company's "value", obviously.

LU, along with the other telecoms (NT, JDSU, ALA, etc...) have in general posted very solid results lately, hence the runup in the sector. i think CSCO's earnings tonight will dampen the excitement for a while, but i'm going to selectively buy on the dips. these stocks are pricey though, imho...

do your DD. good luck.

 

Short Answer: No

Long Answer: There's a reason in plummeted from it's highs, and why it was spun off in the first place -- Lucent has a tremendous amount of debt. Bankruptcy is a very real possibility. Short term speculators made triple their money in 2003, but any long term or further short term speculation is highly risky.

 

buying a stock is never a yes or no for everyone, depends on your goal and risk tolerance. LU's problems are things of the past - value of the stock is whether telecom recovers the way many are expecting. if you want to talk pure historical fundamentals, LU shouldn't be anywhere near it's current market cap.

it would obviously be riskier than buying GE, but the reward could also be many times higher. i have a cost basis in LU of around $4. could it retrace back to high $2's? yep. but if there is a meaningful telecom recovery... i'm willing to risk that money for that "possibility".

 

you missed the easy money.

 

It's an AT&T spinoff. Have you read of any of the wise decisions made recently that ran that company into the ground?

I had Lucent in my portfolio and dumped it after losing huge $$$.
Don' worry it was just ON PAPER! LOL

I think I bailed about $7.00 a share. But as pointed out, it may STILL be overvalued at $2.00!

Check out Avaya too. It's also an AT&T child.

The McCaws out west sold to AT&T Wireless and bought about $14 million in old Ferraris, if that says anything.

Go Goodyear #1 in Racing

Disclaimer: I don't know jacksh-- about the market.
I own Vanguard and Fidelity. S&P 500. Intermediate bonds.

Follow those graphs for awhile untill you understand what's going on.

In the short term, the market is a voting machine.
In the long term, it's a weighing machine.

 

on a risk return basis you "big time" missed it. the telecom turnaround story is out and you would not be buying into anything that has not been foreseen.

time tomove onto the next name. unless of course you see a complete turnaround in an industry with shrinkage in competitors/customers/margins

you buy companies that you think have sticking power when nobody else loves them and sell when they do.

ex lu @ 50 cents

 

henryr is right. You watch for companies you believe in that are hammered by conditions.

Goodyear was down below $4 last year with pension liabilities and a high debt burden, and looming union renegotiations. Struggling along around $10 right now.

The funny thing is, it never had a high recommendation from analysts, yet you could have returned 300% from a paper sack full of cash.

You could go to Vegas and throw dice. Don't put your whole investment $$$ blindly into just a few companies.