Submitted by CrossProfit
It is amazing how many investors glance at charts in articles and don’t bother to read the text. What at first glance appeared to be a Motley Fool pump for NR in the chart of this article(http://www.fool.com/news/commentary/2006/commentary06120723.htm) is actually a due diligence advisory.
Read the text: “And Robert Olstein owns shares of Newpark Resources. While these are things to like about each of these stocks, it should be said, and so I’m saying it, that these are not recommendations. Instead, they’re ideas that CAPS has generated, which I’m offering up in the name of further research.”
NR is trading at a PE of 36+ compared with 19 for the rest of its peer group. Even if somehow NR manages spectacular Q4 earnings of $0.20 per share (instead of $0.09) this would still yield a PE of 23. In other words if NR beats the street consensus by 110% it is still trading at a premium to its peers! The Yahoo Finance forward PE of 14.5 is a typo.
NR is up – not down – over 15% since the Fool article appeared! You would think that investors would know how to read.
Disclosure: CrossProfit associates have profited from short positions in NR in the recent past and may open new positions today.
http://www.crossprofit.com
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