I hope you'll let us know when you start seeing more positives or that your ready to consider some of the stocks in this sector.
Well, I was seeing some signs of a shakeout in the memory markets but then governments started intervening to prevent massive layoffs and now I doubt we will see prosperity for the sector for the rest of the year. That doesn't mean some stocks will not go up from where they are, but they will go up just because they went down too much and things start to stabilize a bit on the pricing front which will help them lower their losses or churn out small profits, if they are lucky. Health of memory segment will have significant repercussions on SCE sector of the industry. Over the last 5 years, memory segment has spent more than 110B in capex and they haven't had much in profits to show! Credit markets have dried up and most of the players in this segment are not going to spend anything other than what is absolutely necessary. Logic and analogs are not doing that great either. There was a time when LLTCs and MXIMs used to command a P/Ss (and not P/Es) in double digits and now they have all fallen back to earth. There is just way too much capacity across the board and no pricing power! Partly, the industry added too much wafer capacity and partly they are moving down the nodes faster than Moore's Law was predicting!
If you don't follow Les H's charts, you might to take a peek. The Semi group he tracks hasn't had one stock above the 200day MA in a very long time. If this column goes nonzero, this may be an early indicator that the sector's stocks are starting to get more respect and worth a more serious look.
Well, I haven't followed Les H's charts but I do follow a wide list of stocks in this sector and I see weakness across the board. As I said in my earlier post, I would rather get on board when things have turned for sure or get some early indications (ASML, Nikon, etc.), rather than buy early in hopes that I have caught the rock bottom! |
