A couple from the Yahoo MKSI thread:
...the outlook for MKSI (the company) is great. Semi equip stocks have been dumped recently, so the stock is way oversold. But the company's business is doing fine. Consider that the long term growth rate of the semi equip business is around 30% a year. MKSI has the advantage of a more widely diversified business than most, so its downcycles are less extreme. (MKSI had positive earnings throughout the last one.) MKSI has a dominant position in its niche business and has the advantage of selling to Applied Materials rather than having to compete with them.
To get a grounding in the numbers, check out the growth forecasts:
biz.yahoo.com
The consensus forecast is for MKSI to earn $1.72 this year and $2.33 next year. Note that the earnings estimates have been rising and that the company has a consistent history of beating the estimates. The stock is currently trading at about 13X trailing earnings, under 10X CY2000 earnings and about 7X CY2001 earnings. Notice also the high rates of growth: +123% this year and 36% next year. Compare that with the the numbers for the S&P500. MKSI offers considerably greater growth with a much lower PE. This is what is called a screaming bargain.
I'd also recommend looking at some of MKSI's numbers:
biz.yahoo.com
MKSI has a Price/Book ratio of 2.97
MKSI has a Price/Sales of 1.75
MKSI has a trailing PE of 13.2
MKSI is at 6.0X its cash.
MKSI's Return on Equity is 27.5%.
MKSI's Return on Assets is 19.2%.
If you want still more information, you can check the ratio comparisons:
yahoo.marketguide.com
Notice that MKSI has superior valuation, growth, financial strength, and net profit margins (despite a higher effective tax rate) than the industry average. Note also that its numbers are better than the S&P500 and the overall technology sector.
If you have patience, just sit and wait for the stock price to recover. Summer is a traditionally slow time for semi equip stocks, so there is also a tradition for chip and chip equipment stocks to sell off during the summer months. If you have patience and an opportunistic streak, buy more while it is cheap.
Given the combination of high growth and low price, the stock has enormous appreciation potential. It also has relatively little risk. Sure, the price might move down a bit, but over time this one will make you a lot of money. When you get to buy the stock this cheap, most of the risk is already priced out of it. That leaves you with the appreciation potential.
messages.yahoo.com
twoyeardouble
by: moimeme1 8/10/00 9:42 pm
Msg: 345 of 345
>>Look at message 328. I have been guessing that MKSI might hit $16, or even as low as $14. I arrived at the number by comparing it to other semi-conductor equipment makers and seeing how low they got on a P/S basis.>>
I looked at message 328, and you only predicted $16. You mentioned you came up with the number by comparing it with other semi equip makers on a P/S basis. Would you care to share the comparisons?
At 16, MKSI would have a P/S ratio of 1.67. In my informal check of other semi equips, I could only find 4 with P/S ratios that low: ASTX, CFMT, COHU and KLIC. IMO, MKSI has much more attractive prospects. Meanwhile, most semi equip companies have P/S numbers that are considerably higher. I think MKSI could double in price and still remain a bargain based on its P/S.
As for MKSI's outlook, the company's guidance is for sequential revenue growth in the high single-digit to low double-digit range -- so most likely about 10%. Their expectation is that the growth rate will be higher in the following quarters.
Because of the volatility in semi equip companies, it is hard to know if MKSI has reached its low. But it is pretty easy to know it's a bigtime bargain at this level. One thing for sure, many people will be expecting it to go lower when it actually bottoms.
At these prices, the upside potential greatly outweighs the downside risk. To put it differently, what is the case for selling? If you can't come up with a good reason for people to sell, you can't reasonably expect them to sell. So perhaps there has been a lot of negativity and fear contributing to a negative environment for semi equips and other tech stocks. But even irrational pessimism and panic will only take it down just so far. Eventually, everyone who will sell has sold, and the only one's left are the bargain hunter buyers.
We may be there now.
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