Yes... SLR reports on Monday, and JBL on Thursday.
I value JBL as worth at least a 15% premium to SLR on a stock price basis, after comparing earnings, PSR, margins, etc. This is why I didn't own any SLR for over a year, until the recent drop in SLR. My view is that the largest EMS companies really should grow at roughly similiar rates over the longer term of several years, although JBL should see a faster growth than SLR due to its lower revenue base. Solectron should run into sheer size constraints at some point, but not in the next two years. Solectron already said they will do $20B in the 2001 FY, and that implies that about a year from now, the stock will be over 100.
So when JBL spurted to a 20% premium, I began to add SLR to rebalance my EMS portfolio, and lightened DIIG and JBL to facilitate. Since DIIG and JBL had just spurted ahead, I didn't need to sell all my new shares in those stocks to buy my SLR position back. Each time I do the flip, I end up with a larger position in the sector.
Next week should be interesting.
Paul |
