<< AMAT is currently selling for roughly 10x their quarterly sales run rate. In the 1998 trough, AMAT sold at 2x sales, at the 1996 trough it was 1x sales.>>
One the one hand this has been the state of the world for many, many months with many of the larger cap equips. On the other hand, there can be no denying the possibility such valuations will be significantly deflated.
Your observation was confirmed (from the flip side) when S&P recently upgraded KLIC* from 'hold' to 'buy':
>>KLIC was recently trading at 2X book value (1.5 p/s), well below historic peaks of 5X to 6X.....<<
This perspective could be applied to roughly 1/4 of the stocks on Don's list.
Also...
I noticed that the BtB report made a specific point of noting the continued strong business on the backend side:
"Front-end equipment bookings are at a low point for this downturn," said Stanley Myers, president and CEO of SEMI.
"The improvement in overall equipment bookings, was driven by a fifty percent increase in the final manufacturing bookings. January marks the second consecutive month in which bookings for the final manufacturing equipment segment increased significantly from its previously weakened state."
This could be another argument in favor of focusing on undervalued backend companies.
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*While the odds that I mention KLIC in my posts on this thread appear to be (and are) quite high, the odds that AMAT is mentioned in the other 90% of the posts is extraordinarily high. For a thread that, on the surface, is dedicated to supposedly objective data presentation, both of these behaviors are unseemly.
I will accept the criticism of tunnel vision towards KLIC. Bellwether or not for the backend, I should focus on other companies as well.
Will others accept the criticism of tunnel vision towards AMAT? Bellwether or not for the sector, folks should focus on the 27 other companies on Don's list as well. |
