<< I am new to this thread, and there is something very basic that I don't get about intel's current valuation:
Intel now has a P/E ratio of about 21. CPQ has about 30. DELL has about 45.
Given the following:
1. Intel has 85% market share.
2. CPQ and DELL each have less than 15% market share.
3. CPQ and DELL have at least 5 other first tier competitors who are likely to keep, give or take, their existing market share.
4. Both CPQ, DELL and other first and even second-tier manufacturers use 95% Intel chips.
5. Even if Dell grows by 30% a year in the next couple of years, and Intel only by 20%, wouldn't a company that's set to gain from both DELL's increased sales, as well as DELL's competitors' sales (that company being Intel), likely to grow at a higher rate, given enough years, than any one of these computer companies, if 85% of computers still use Intel chips?
6. Consequently, why is Intel valued at only 20 times earnings, while CPQ and DELL 30 and 45, respectively?
Shouldn't Intel be valued at at least a PE of 30? >>
I think Intel should have a PE of 15(trailing income) and should be
priced around $60+. DELL and CPQ should have PE's of 11
and IBM a PE of 9. These prices would represent "good value" to me.
As it is, all these companies are valued too richly valued and it might
be time to move on to find better values elsewhere.
I am not suggesting that I will short these stocks, but I certainly won't
buy them until.
the market psychology changes or they represent better buys.
regards
-Paul |
