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Technology Stocks : Alliance Semiconductor
ALSC 0.8100.0%Jul 10 5:00 PM EST
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To: Peter H. Mack who wrote (8028)7/27/2000 1:32:36 PM
From: Czechsinthemail  Read Replies (4) of 9582
 
ALSC has been going down with the semis. The SSB forecast has given people something to hang their fears on, but you could as easily describe it as a traditional summer seasonal selloff, profit-taking after a great run, etc.

The fundamentals at ALSC remain outstanding. The company has given very conservative forward guidance. If the company has about $60 million in backlog it expects to ship in the Sep quarter, it should easily exceed the guidance of 20% revenue growth. If new products come into production as expected, the company's additional production capacity will allow the company to increase production and sales further. And as the company improves its chip yields and gets better pricing, improving margins should increase earnings growth at a faster pace.

The stock is trading at a conservative PE of maybe 35x this year's earnings estimate. But that PE is likely to be very conservative if the company turns in better than forecasted earnings. Meanwhile, the stock is trading below book value. The company has a tremendous pool of liquid assets it can use to buy its own stock if nothing better. At some point, I expect ALSC to liquidate more of its stock portfolio. There are many directions the company can take, but high liquidity and additional production capacity are happy problems for semiconductor companies.

The weaker the semiconductor market gets, the stronger Alliance's relative advantage becomes. Who knows how the stock may trade short term. Long term, the combination of value and growth is hard to beat.

I bought more today around 20.
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