Finance Essay Example | Topics and Well Written Essays - 1500 words - 6

Finance - Essay Example Cree: This is a company that makes energy efficient lighting products, such as LED diodes and compact fluorescent light bulbs. Analysts gave the stock a consensus buy rating and a fair value of 85.00 per share. At the time the initial purchase was made, the shares were down in value because of investor fears of a cyclical downturn in the semiconductor industry, and because the inventory of flat panel TVs and computer monitors is high. However, analysts pointed out that less than 12% of those products use Cree diodes, and say that if that segment of the business went completely away, it would impact earnings per share by less than 10 cents. Since the company reported earnings per share of 1.45, it would remain solidly profitable if this happened. Because most of the pressure is based on investor worries rather than on company or industry performance, the stock could be positioned to outperform, and is a good investment for that reason, since it is so solidly profitable. Pilgrims Pride Corporation: This company operates chicken processing plants and prepared food processing plants in 12 states of the Unites States. 64% of its holding lies with JBS, a huge Brazilian meat processing company, but the market for the minority shares is very active. Analysts have a hold rating on the stock, which currently sells for about 12.00 per share, and do not assign it a fair value. Analysts are concerned that the company might be planning to expand too rapidly. Chicken prices increased over 23% last year. The company plans to open three more plants this year, and there are some worries that this could cause prices to go back down. However, they believe that if the economy continues to improve, even at the modest level it is improving now, the price of chicken will go up even if these plants are opened. The other concerns involve a high debt level, and the fact that JBS put in all new management,