<<Last quarter earnings and outlooks generally exceeded stated expectations and the market still sold off.>>
Yes, but we have had some previous discussions along the lines of the semi-equips were arguably "over valued" at the beginning of January. As the earnings reporting season came on in full force, many "entities" took advantage of the situation by selling into the news and making some nice profits.(Wish I had been one of them!<g>)
Looking at the PEG's at that point in time,
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there were only 2 stocks, KLIC and FSII, that had PEG's less than 1. AMAT, KLAC, NVLS and TER had PEG's of 1.37, 1.65, 2.61, and 3.40 respectively. At last Friday's close,
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they had PEG's of 0.98, 1.08, 1.15 and 1.08 respectively. KLIC and FSII closed last Friday at 0.45 and 0.81 respectively. To summarize, in January only 2 stocks in the Group had PEG's less than one, now we have 13 with PEG's less than 1.
So at this point, going into this quarter's earning reporting season, the PEG's are very low compared to the January period. Arguably, the Group is now looking at still better earnings going forward - NVLS is a good example after looking at their report tonight.
We have kept track of the price action for the Group since the selected base(high) of 1/16. Since that point there were 9 down weeks, then 2 up weeks, and last week was "flat". Wither do we go now?
If good earnings continue to flow, order input is up, etc, much as NVLS is reporting tonight, I think the stock prices going forward will be up for the short term - otherwise, the PEG's will really be out of whack. Out of the NVLS report tonight, earnings estimates will be raised during the next few days. If other stocks bear out this scenario, they will have rising earnings estimates as well, and unless stock prices rise, the PEG's will continue to go down. Not in the cards IMO.
Don |
