To all: AMAT reality check;
for anyone who cares-
Now, I'd appreciate your reading
this entire message before you dismiss
my intro as the ravings of an overly-
optimistic moron...
I put a lot of work into a few
facts and figures here, which the patient
can peruse for free.
It's recently become fashionable to bitch
about weak quarters and workforce reductions.
Of course I'm not complaining, since the people
who are selling AMAT into the tank are the same
people that I keep buying from. What exactly
is the story? Is it getting a little too
depressing to hang on? Personally, I'm glad
they see it that way.
Today AMAT closed at $25 even, unchanged
from yesterday. It traded in a 1/4 point
range (pretty tight) with volume around
1.4 million shares. Closing price leaves
it with a P/E in the mid 6's. Meanwhile,
it's racked up a Beta of 1.42 (generally based
on 3 years of history). Over 5 years, EPS has
grown at about 32.5% annually.
(See www.secapl.com)
With the volatility of technology,
AMAT goes up and down but mostly up.
That's hard to remember, since it's
fallen from near $60. Of course, I
wouldn't expect you to take my word
for it- so I've got three years of quarterly
price history down below. (For a more recent
visual, see www.stockmaster.com).
Now, another common contention is that
semis are heading into the crapper.
I doubt it. Manufacturers are still
selling, and buyers are still buying.
But, don't take my word for it- I've
got five years of history and four years
of forecasts from the Semiconductor
Industry Association (see below).
Growth is expected to SLOW for a while,
but that's hardly a catastrophe.
As for that affecting prices? The market
is already well aware of expectations,
both for the industry and the company.
So, here's the story. This thing's on sale.
K-mart prices. The P/E on AMAT is lower
today than at any time during 1993, 1994,
or 1995. The recent bad press is good...
unless you got in this time last year.
A supplement in the Wall Street Journal
(2/29/96) lists AMAT among the top
performing stocks over 5 and 10 years,
with annualized returns of 71.1% and
40.7% respectively. Beats the hell out
of a Money Market Fund, folks.
The current popularity of pessimism
leads me to one of my favorite quotes:
"The best time to buy is when blood
is running in the streets".
It ain't easy, but I'd recommend it.
At current price levels, you would have
had an opportunity to sell at a profit
at least once in every quarter since
late 1994.
You do the math.
Stock History* Semiconductor Sales**
PRICE P/E
Period High Low Range Year World Sales($ Bil)
1995 Q4 59.13 45.38 17.6-13.5 1999 (F) $ 234,500
1995 Q3 53.69 30.06 17.2- 9.6 1998 (F) $ 196,900
1995 Q2 30.81 19.25 14.3- 8.9 1997 (F) $ 169,800
1995 Q1 26.25 19.50 17.3-12.8 1996 (F) $ 154,000
1994 Q4 26.25 21.50 18.0-14.7 1995 $ 144,404
1994 Q3 24.63 19.38 18.1-14.3 1994 $ 101,878
1994 Q2 25.86 18.19 19.9-14.5 1993 $ 77,309
1994 Q1 21.86 15.00 20.6-14.2 1992 $ 59,864
1993 Q4 19.63 14.31 23.4-17.0 1991 $ 54,605
1993 Q3 16.50 10.75 24.3-15.8
1993 Q2 11.34 8.75 21.0-16.2
1993 Q1 9.69 7.22 26.9-20.1
*Stock prices are rounded and split-adjusted,
as necessary. P/E ratios are calculated
based on stock price and earnings as
reported in the Edgar database maintained
by the Securities and Exchange Commission.
(www.sec.gov)
**Industry sales as reported by
the Semiconductor Industry Association.
(F) indicates a forecasted value.
Thanks for your time.
I hope you've enjoyed my ramblings. |
