Gorilla and King Portfolio Candidates Message Board

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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: willkm3 who wrote (29393)	8/5/2000 12:31:30 PM
From: the dodger	Read Replies (2) of 54805

"...These questions caused me to do a little mkt cap research, which is listed below. _______ MktCap__ 6-30-95__ Gain CSCO___ 459 B____ 19 B____ 2300% INTC____ 426 B____ 23 B____ 1700% There's something that's been gnawing at me, and I think it needs to be pointed out about INTC specifically, and certainly pertinent to a lot of our other "gorillas"... While it's certainly true...we've seen Intel increase it's market-cap from 25B in 1995 to a current 425B in 2000...which IS a 1700% increase. BUT... Isn't a core characteristic of a gorilla supposed to be "explosive earnings"? And if so, I think it should be noted that Intel reported 3.5B in profits in 1995....and 7.3B in 1999...which is actually little more than a doubling. Now that's very respectable -- but it's certainly NOT spectacular. And that's telling me that the REAL "tornado" occurred in INTC's PE ratio and NOT in their bottom line. In other words, we owe about 80+ cents of every one-dollar market-cap increase to PE expansion -- and that's bothersome, because... According to the numbers at Quicken.com... INTC's 3 year revenue growth is 45.70% lower than their industry average, INTC's 3 year earnings growth is 48.33% lower than their industry average. INTC's 3 year cash flow growth is 17.08% lower than their industry average. And the concensus of 25 analysts is for INTC to grow earnings at only 11.8% from FY2000 to FY2001...yet it's trading at a 45.5 PE (based on trailing earnings). So is the explosion in their PE ratio truly justified?...or are we all merely beneficiaries of "momentum investing" because gorilla-gaming has gained in such popularity in the last couple of years?...i.e...investors buying INTC merely because it's been labeled a "gorilla" rather than its fundamentals. And if the latter half IS true, there's at least the potential for Mr. Market to deliver a lot pain via INTC in the next couple/three years. td

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