AMBA: is it too late to buy?

I’ve owned AMBA since Sept 2013. I bought more at around $65 and $73 earlier this year. I also sold deep in the money puts ($85) in May, and on the day of the earnings announcement (after the announcement) I bought more below $93 in the after hours session. Last week when the shares were at about $101, I sold deep in the money puts ($125) and purchased $100 leaps (expiration 2017). After AIOCF earnings came out, I suggested that it might be wise to trade AIOCF shares in for AMBA shares (see post #8134).

Now, AMBA has risen quite a bit. So what is likely to happen in the future? Is it too late to buy? I’m not buying more because I have about a 6.8% position without even considering my options positions. But I do not intend on selling any shares. Here’s what I think:

Next quarter’s guidance implies that we can expect at least 83 cents in adjusted EPS. This would represent a 1 year EPS growth rate of 132%, up from the previous quarter of 114%. At guidance, the yoy EPS growth would slow a bit from 184% to 124.3%. However, the EPS growth is still high and even at today’s price of around $113, the 1YRPEG will be 0.30 when earnings come out and the stock price at a P/E of 37 would be $106. Sure, that’s a little less than $113. But I am looking about 3 quarters ahead. Last year, AMBA did not have Xiaomi as a customer and the drone potential was still a future possibility. I think these two factors and that most/all of AMBA’s end user markets are growing by leaps and bounds bodes well for the business. I think that when they report the full fiscal 2015 year in early February 2016, the TTM adj EPS could be $4 or more. That’s just my guesstimate/prediction (just an opinion). Now, if the P/E says at around 37 and they hit $4 EPS for 2015, then the shares would be worth $148 8 months from now for a return of 31%. My personal opinion is that AMBA still has a lot of growth ahead and that the future stock price should reflect that growth. Might we have a pullback? Maybe. I just don’t know. I’m not trying to time the market and plan to just hold my shares.