Gottfried,
RE: "And how to know the top of the cycle is the question."
Fortunately, for most of the semi-equips, the bottom of the cycle was during the past 2 quarters and we have much time to answer.
I established some initial ballpark targets which I presented here a while ago. I assume a 5 year expansion with a 20%/year growth rate. This produces a multiple of 2.5. I apply this multiple to the peak price of the last up cycle, 59 for AMAT, and arrive at $147.5 for AMAT. Now, if AMAT starts executing its predicted 32% growth rate, the multiple will be adjusted up. When AMAT's price starts entering the target neigborhood, serious thought will be given to the credibility of its PE and the future year forecasts it is based on. Also, I will be making these observations for: EGLS, KLAC, LRCX, NVLS, SVGI, and UTEK. Maybe I will start a thread: "Semi-Equips: The Party's Over".
Cary |
