This has to be played with going LONG Cdn. on GSI Lumonics and SHORTING US on Electro Scientific Industries. GSI is outperforming, but undervauled to Electro.
This pick is in conjunction with the shortening of Electro Scientific (ESIO-Q), which is not doing as well and yet has a much higher valuation. Has great growth. Speculative and high risk.
Had a big drop in 2000, formed a base with a down trend line. This line was broken in 2003. A little bit of a late starter. Expects to buy some on Monday.
(A top pick Apr 23/04. Down 6.5%.) Difficult to pick stocks in a market correction so it had a bit of a pullback. A very solid support level of around $13. Still in a good buying range.
Inventory is a problem for them and right now they are on the downside of the issue. Slowdown is expected for the next 2 quarters. Buy into a sell off in this quarter.
Likes them long term, but a little worried in the next 1/2 quarters as a good chunk of their business is semi conductor capital equipment which has a lot of excess capacity as the semi conductor business is slowing down. The business model looks better than it was before. They are going to make money at a lower level of revenue. Made very smart acquisitions and have lots of cash. Would buy more in the $10 range.
Focused on laser technology. The driver of the stock seems to be the semi-conductor industry. If this industry has a glut, then orders for GSI disappears. The last 2 years has seen a nice run on orders, but the last quarter they dropped sharply. In the near term, revenues are about to decline. Company is profitable though.