Cardica Inc. – the problem with stocks you don’t understand

Not many analysts cover Cardica Inc. (ticker symbol CRDC) but Standard & Poor’s has a report on this company that says new products in 2008 and 2009 should mean good things for the company. The problem is that I’m in no position to judge how successful these new products might (or might not) be.

In the meantime CRDC came out with earnings today and (no surprise) they are still losing money. The stock is still going down ($5.20 down over 3% today although it was lower in the early afternoon).

For an investor like me there’s no way for me to discern how good Carica’s future products might be. That’s the key with this stock because if this company is going to stop losing money it’s going to be because doctors and hospitals need their products.

This is a perfect example of what Peter Lynch talks about in his book. Someone who operates on hearts would be in a perfect position to estimate how well these products will perform. I guess I’m in the wrong business…

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