Gottfried,
I have come to the conclusion that the semi-equip area is too volatile to be a "buy and hold" sector. By looking at charts of price action during the past years, the swings in valuation can easily change from 2 to 10 times depending on the particular chart and period of time.
As you point out, time marches on and who knows if a particular stock will ever get back to some of the lofty prices they had at one time. Examples abound of stocks that were once "high fliers", but no longer today. Some, like AMAT have done well over a long period, but that is the exception rather than the norm.
The question is - what is going to happen next? We had a small drop in bookings for September compared to August, but is that falloff going to continue? - and if so, for how long? Assuming a "soft landing" for the economy and a relatively good business climate going forward, the bookings could ease their rate of ascent, but still continue on an upward path. If that scenario happens, the semi-equips will continue with good earnings, and much greater share prices should result.
Right now, the situation doesn't make much sense. All the PE's are quite low, with a few exceptions, and the 5 year growth rate is projected in the 20 to 35 percent range. If the projected growth rate is essentially true, the stock prices are way too low. I do believe the intense cyclical nature of the sector in the past will smooth out somewhat in the future. Semi-conductors are now being integrated into everything we use on a daily basis - it's not just PCs anymore! FWIW <<gg>>
Don W. |
