Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 249.89

+3.1%

Nov 26 3:59 PM EST

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To: JOED3 who wrote (8518)	10/10/1997 7:00:00 PM
From: Math Junkie	of 70976

In the three equipment industry cycles since 1980, each uptrend in year-to-year sales growth lasted at least two years. Each down period consisted of two flat-to-down years. 1996 and 1997 are the flat-to-down years this time, so 1998 and 1999 should be up years. The last peak of the semi equip stocks was in the middle of the last growth year. Therefore, if history repeats itself, we should be OK at least through the middle of 1999. Applied's earnings are forecast to increase by 20 per cent per year on average, and 59% from Nov 97 to Oct 98. AMAT is currently trading at 24 times 1998 forecast earnings. With the S&P 500 trading at about 20 times earnings, with a much lower earnings growth rate, it looks to me like there's quite a lot of upside potential left if the current outlook for the market as a whole remains favorable.

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