I'm long AMAT as of today, at 35.
Also placed limit orders to buy more stock, at 32.5 and 30. Below that, I will consider 2004 LEAPs.
Caveats:
1. at these prices, I think the stock is a better risk/reward than the LEAPs. I think we need to get into the mid 20s, before LEAPs look good.
2. I am a weak hand. If we rebound to 40 and stall, I will sidle quickly back to the sidelines.
3. this was a small purchase, leaving me enough buying power to continue buying in equal $ increments, down to 20.
4. my purchases of telecom-related, chip, and storage stocks are larger and began at higher levels, as I'm guessing they all recover before the semi-equips.
5. I'm starting to buy now, as we retest a multi-year low on AMAT, as I think the valuations are now, finally, reasonable. I calculate a P/S of 3.4 for AMAT now: = 35/(8.9B/854M). I'm sceptical, however, of that result, because the TTM sales of 8.9B is sure to fall off steeply in the next 1-3 quarters, meaning the stock price would also fall off to the same extent, just to maintain the same P/S ratio.
It's been a long, long, long, long wait to get long this stock in this downturn. Is anybody today hearing anyone say anything positive about the stock, the sector, or the market? No? Good. Then I'm betting I got it (approximately) right. |
