CSR Joke

Perhaps to be a good investor you need to be able see one of your holdings drop 25% in one day and laugh!

That was my reaction on Monday when CSR revised down their revenue guidance for Q3 and the shares tanked 25%.

Why laugh? Why not? There was not much else I could do anyway! CSR had been good to me and I have already taken some profits when they peaked at 1400p a few months ago so at least my trading strategy was validated.

So my remaining CSR shares are back at break even after being up 50%. Whatever. They will rise again.

Say they make £210 in revenue for Q3. By my calculation that is an EPS of at least $0.30. Say they make $0.30 in Q4 as well. That is a 2006 EPS of $1.00 or 53p. At 900p CSR are on a 2006 PE of 16. Say EPS growth in 2007 in 30%. That gives you an EPS of 70 and a 2007 PE of 13.

Does that sound cheap for a company growing at 30%?

I think so. Dang cheap.

Will I be averaging down? NOOOOOO! Never average down unless you completely understand the risk and the market is completely devoid of other possibilities.

Roll on CSR - your share price is very entertaining!