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Technology Stocks : Applied Micro Circuits Corp (AMCC)
AMCC 8.4500.0%Feb 3 4:00 PM EST
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To: MulhollandDrive who wrote (346)2/11/2000 10:21:00 AM
From: Trader Dave  Read Replies (3) of 1805
 
BP, I don't know yet if amcc is 2 to 3 years ahead, probably not.

But even if it's one year ahead, it could see an 80% compression from here and still be "fairly valued" whatever that means.

The nice thing about owning stocks if you don't have to make a rash decision and you can sell part of the position.

If we sell at all it will only be a portion.

There's probably a good discussion developing on this thread that could be applied to deciding how to value extraordinarily high growth rates. If they are sustainable, paying a very high pe on forward one year earnings makes some sense.

If 30% is sustainable for 5 years (cisco) and 60% is sustainable for 5 (amcc) years and you use a higher discount rate due to the "risks" of the higher grower, I'd still bet you'd pay more than twice the pe to growth rate ratio for the higher grower. I have to sit down and pencil out a discounted earnings flow to see.

TD
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