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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector
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To: Robert G. Harrell who wrote (2468)12/5/2000 4:47:36 PM
From: rich evans  Read Replies (1) of 2542
 
Well, the ECMs had a great day today recovering well for one days action. I wonder though with the present investment climate and many fast growing stocks being reevaluated by the investment community whether this is not also happening to the ECM sector to the effect that PEs nd PSRs for this sector will be set at lower numbers. It seems on average that the top tier ECMs were selling at a PE OF 37 on average and actually more during the heyday. SANM was usually more in the 50 range. Now I wonder whether this top tier PEs have been lowered to the 25 to 30 range with the second tier which used to average around 25 down to the 15 to 20 range. And PSRs coming down to the 1- 1.2 from the 1.8 to 2 range for the top tier. If so the bounce back to old highs may be restrained. The companies themselves seem to be doing fine and continuing in their growth rates of 40% plus and have good defensive qualities as set forth on this thread by Patroller and others. But the market does not yet appreciate these defensive qualities IMO. So I personally have lowered my expectations on valuation but nevertheless have continued to buy believing that growth will save us and create good profits and investments despite lower parameters. But I am about out of bullets unfortunately. Anyway these are my thoughts on a nice day in Seattle.
Rich
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