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Technology Stocks : LSI Corporation

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To: BWAC who wrote (23917)	7/28/2001 1:37:43 AM
From: E_K_S	Read Replies (2) of 25814

Hi BWAC - Interesting article by TJ Rogers (http://www.cypress.com/investor/financial/tjstock.pdf) I wonder if the same analysis applies to LSI products? I did some back of the envelope calculations and according to "HAL's" computer BUY points, we should be buying LSI here up to $23.78. In his ten year study of Price/Sales analysis HAL's BUY point range was when: 1.6>P/S<3.20. LSI's Price to sales ratio as of today's close is between: Market capitalization = ($20.85 x 323 million shares) or about $6.735 Billion Sales This Year's: $1.9 Billion Next Years: $2.4 Billion (analyst's estimates) Range for P/S: 3.55 - 2.80 Therefore based on Next Year's earnings of $2.4 Billion you would BUY the stock up to a P/S = 3.20 or when LSI reaches a market cap of $7.68 Billion ($23.78/share). The stock could go much higher but according to TJ's 10 year trend analysis the P/S range between 1.6 - 3.2 is considered the "value zone". The article goes on to state that a SELL should be done once the P/S goes up 0.5 from your initial Buy point. Assuming sales stay constant, this move in market cap would equal about 1.55 points move in the stock price. To summarize the article, I guess we BUY LSI up to $23.78 and once we have a 1.55 point gain sell and get out! It's interesting, I was reading Michael Murphy's stock letter the other day and his BUY point for LSI is up to $22 1/2. He has a 12 month sell target of $40. It has been one of his top picks going back several months. It all boils down to sales and earnings. ....and LSI's balance sheet isn't too bad either. EKS

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