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Wednesday, August 18, 2010

Smart Stock - PLAB

Between August 10 and August 13, shares of Photronics(PLAB)dropped almost 20% from $4.85 per share to $3.95 per share right before the earning announcement on August 17. Although all the major indices all sufferred loss at the same time, the rapid and huge drop still gave investor impression that the earning announcement could be disappointing.

As investors have all gave up hope and ran away for safety on August 13, two huge buy came late on that day with 1 million shares each. Panic sellers didn't seen to see the spike in volumn and continue to flee the stock.

Fast forward to the following Monday the stock began to bounce back ahead of the earning. For three days the stock regained almost all the loss and is back at $4.49 per share today. And speaking of the earning which came yesterday, the third quarter simply blew pass analyst estimate by a wide margin of 45%.

The lesson learned here is don't sell in panic. I actually owned the stock before the drop and when the sell-off began, the first thing I did was not to panic and do a little DD. The insider transaction still reflect bullish signal as the most recent activities in August was a buy. Then I checked the income statement and it reveals that the company has been on a turn-around for the past three quarters and the current quarter should reflect the same trend.

So I concluded that it must be a false-alarm and actually add more shares during the plunge. By today not only I recovered my loss I also end up gaining overall.


Anonymous Anonymous said...

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August 19, 2010 at 6:40 PM  

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