I love these stocks, in fact, I spend most of my time at nights and in weekends searching for these stocks: “The undervalued stocks”. SEAC is one of them, it dropped 15% on Friday, and it will probably drop more next week, before an imminent rebound. Why do I believe that there will be an “imminent” rebound?

Let us examine the company, it has a viable business model, it is not losing money (EPS is 60 cents), and the P/E is a low 12. The book value of the stock is $6.22, so the stock has closed at just 16% above its book value ($7.20 in the after hours), bullish, but not extremely bullish. An extremely bullish price is below book value of a few percent points above the book value. I think the stock has still room to drop, but not too much.

Another 50 cents drop in the stock price ($6.70) would be a great entry point, and I would buy half my position at this point (maybe around 200 shares), and then buy another 200 if the stock still goes down more after a week from my purchase.

Now why did the stock god down 15.57% on Friday? No reason whatsoever, in my opinion, with the exception that apparently analysts expected them to beat their expectations, but they did not.

Such stocks, once they fall, have huge potential in my opinion, and if you keep your investment small (like less than $3,000), you’ll be able to reap some great benefits, with very little risk. Remember BIOS, MLNX, and MAS?