Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 292.20

-1.2%

3:59 PM EST

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To: Math Junkie who wrote (48570)	7/1/2001 10:37:55 AM
From: Kirk ©	Read Replies (1) of 70976

I'd take a look at price/sales. IF a company has competition, margins get squeezed. Eventually it boils down to how much profit can a company squeeze out of a dollar or earnings. Here is another link for comparison quicken.com Notice from Both Links that LRCX returns nearly double on an invested dollar. That seems to be why it gets valued higher. It can generate the same raw earnings on half the sales. IF you were buying one of two local donut companies (LRCX or NVLS) to compete with Krispy Kreme (AMAT), given that both are selling for the same price, would you buy the one that was twice as profitable? The market is saying yes and it is really interesting that all 4 companies have a price to book around 5.0 with LRCX and NVLS dead equal at 4.6. I am not saying one company is better than the other... just offering a reason why PEG in a downturn is not the ONLY tool I use to value stocks. Kirk

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