Applied Materials No-Politics Thread (AMAT) Message Board

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Technology Stocks : Applied Materials No-Politics Thread (AMAT)

AMAT 318.72

-2.0%

3:59 PM EST

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To: Kirk © who wrote (3254)	9/26/2002 12:56:19 AM
From: Mark Marcellus	Read Replies (2) of 25522

My question was "how do you value them?" or "What formula do you use"? And my answer was "ROIC", essentially return on book value + debt. FWIW, here's what I get for MSFT & AMAT: 2001 2000 1999 1998 1997 AMAT: 9.77% 32.65% 17.16% 6.31% 15.97% MSFT: 16.57% 26.99% 34.55% 32.77% 39.06% AMAT's ROIC numbers are exceptional for their sector, but they're never going to be able to consistently put up better ROIC numbers than a company like MSFT (or Coke). IMO, ROIC numbers over a number of years are the best indicator of a company's investment quality for a long term investor.

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