Cary,
if you have more difficulty with the current strength, it
is because you are speculating that the situation will
not improve, or even continue to degrade in the coming
months. Others, prefer to speculate that the situation
will improve and are therefore holding, or buying, AMAT
near current levels. One way or another, it is speculation
--whether it is described as a future dream or a nightmare.
Investors are not using the April btb to make their
decision (that was in any case already included in AMAT's
most recent quarter). Instead, they are betting that the
seasonally strong sept-march period that is coming up will
lead to improvement in bookings and btb. This is not such
a difficult thought to entertain, I think, after the long
and brutal period of compression we have witnessed. More
importantly, if consumers decide to buy new toys, semi
companies will have no choice but to upgrade to the new
technologies (even if they have excess capacity because it
has become obsolete). Finally, valuation: be a little
generous! At a run rate of 10billion, AMAT was doing close
to 3$ per share. At a small p.e. of 30 (for such a leading
global company with tremendous competitive barriers), that's
90$. Isn't it unreasonable to imagine that at 20billion,
AMAT will be earning 6$-8$ per share? At a p.e. of 30,
that's 180-240$. At a more generous p.e. of 50, 400$ is a
possibility. Who wouldn't want to make 3-8 times your
capital in 3-5 years?
Trilobyte
p.s. I continue to hold my AMAT, NVLS, PRIA, ASML, CYMI
during these periods of "strength"! |
