How frustrating! A very lengthy posting terminated by AOL logging me out. Oh well...the key points:
1. SFAM should outperform the semiconductor equipment sector slightly during the next year.
2. I think that there will be a new fab building boom that really gets rolling in the second half of this year and last several years. This is the kind of fundamentals-driven stimulus that this stock needs to really get moving.
3. There is a very good probability that the stock will more than double over the next year based on the P/S ratio increasing from its current 1.8 to 2.8-4 and the sales per share increasing from about $7 now to a run rate of $11-$13 annually with expectations of an additional 30% or so increase in sales in the following year.
4. When the upturn really gets going, we'll need to monitor who's getting the new orders. I suspect that SFAM will win some and lose some, but that they'll hold onto 10-20% of the polisher share. Though down from their hey-day, they should be able to very well on that kind of share. They could upside that estimate if they do extremely well with copper--but that's unlikely. The Auriga, the 776, and their derivative tools remain very good options for many high-volume customers, and SFAM should do fine--as will several of the other CMP makers.
5. Their high cash level and valuation relative to potential acquirers makes them continue to be a good takeover target. When the next building boom gets going, there will likely be a flurry of such activity and SFAM may be the target of some of it.
That's the Readers' Digest version. For the details, I'll have to wait until I have more time. Regarding my investment, I have held my current position more than 2 years after being in and out of the stock several times, starting in late '97, shortly after the SFAM IPO. My position represents 2.9% of my portfolio, and I don't intend to add to it or to sell any in the near future.
Profitable investing,
Mr. Sam |
