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Technology Stocks : IDTI - an IC Play on Growth Markets
IDTI 48.990.0%Mar 29 5:00 PM EST
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To: Stu E. who wrote (11056)12/20/2000 10:53:42 AM
From: Rob S.  Read Replies (1) of 11555
 
I would discount those earnings projections by about 15% on IDTI. On most semi companies, I would factor in a 20%-33% discount on currently forecast earnings and sales.

Having said that, I think this week is a time to buy tech stocks with good earnings and growth potential. You must buy them smart - when they dip down dramatically. We are seeing panic selling, tax loss and window (un)dressing related selling as investors clean up their portfolios ahead of the holiday. I think we will see a rebound by the end of January. This could start early in January as institutions jump back in to snap up what are now cheaply valued growth stocks.

My suggestion is, of course, personal guess work. It is difficult to tell where this market will go. My thinking is that the market is pricing stocks as if a recession is here. I don't think that is the case. There is no recession yet and none is likely imo. There is a major inventory adjustment and slaughtering of the fat pigs of the tulip bulb hype market the techs stocks had been in. The 7 standard deviations divergence between the tech heavy NASDAQ and the S&P 500 has swung from one extreme to the other. Now we have a negative divergence as tech stocks are trading at a steep discount of price, earnings, growth (PEG) ratios compared to norms. The long term average PEG ratio favors the NASDAQ - growth is normally rewarded disproportionately above earnings without growth.

This is a gut wrenching market - the time to buy selectively is now. Kick me if I am wrong!
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