To all,
I thought this was the AMAT thread!
The majority of recent posts, it seems, are more about INTC, CPQ, DELL, CYRX, AMD, DEC.
If I want to read about those companies in this much depth, I'll look to those threads.
I come here to read about AMAT. If the off-topic discussions continue, I'll stop reading the thread.
Regarding the Michael Burke predictions of a melt down in tech stocks. This happens occasionally. It usually catches me by surprise. I bought AMATat around $25 in mid 1995. At the time its P/E was in the 20s and I thought the stock was a bargain. Nevertheless, the stock shortly peaked around $30. then proceeded to drop at least 50% over the next year. This confused me since at the time, business was still doing well. AMAT was well into 1996 before any "real" slow down materialized.
The hard-learned lesson: the market (share price) preceeds actual business performance by at least 6 months. Back in mid 95 when I bought, the market "saw" the slow down ahead and trashed AMAT. The cycle is sort of like this:
1. the stock gets slammed while earnings look good. As the price falls to grotesquely low levels, P/E ratios drop to well below 15.
2. The slow down in business materializes, so earnings fall. Meanwhile savvy investors start buying the dirt cheap shares. Trailing P/E multiples go to what looks like unjustifiable levels. In the past few months, I think AMAT's trailing P/E has been over 40.
3. The slow down ends and sales begin to pick up. As business improves, earnings increase so that eventually P/E will come down to what appears to be reasonable levels, say 20s.
What about now? We are only a few quarters into number 3. Unless we experience an extremely short cycle this time, there should be several quarters of good growth ahead. How many? Beats me.
If the stock gets trashed, buy the heck out of it. I certainly will. I could give loads of fundamental reasons why, but I consider them obvious.
JMO
Stu B |
