Sam,
RE: "With all due respect, why wait for AMAT conference call?"
Good questions!
I will try to give satisfactory answers. The recent market action is telling us that there is a ZERO confidence level in the current '98 and '99 EPS estimates. In 1996 AMAT CEO, James Morgan changed his forecast date for AMAT to be a $10B company from 2000 to 2002. If my Y2K forecast of $100+ slips a year or two, I am in VERY good company!
The Asian crisis added to the other well known concerns about '98 earnings has increased UNCERTAINTY and decreased VISIBILITY. These are the culprits that drove AMAT to $11+ last year! NVLS, KLAC, UTEK, EGLS, LRCX, and CYMI have had good Q reports and gave positive guidance. They failed to stem the tide.
AMAT usually gives more comprehensive guidance. They forecast the next 12 months and give ballpark revenue and booking estimates. Your "good buying opportunity" must be based on something more than "the price is down a lot so the market must have over reacted." It also should not fall back on "it will be higher 3 to 5 years from now so I can buy at the current price." I believe it will be higher, but I don't like to buy at $40 or $32 if it is going to go to $11 on the way to $100+. Everyone (investors, analysts, etc.) is back to seat of the pants flying. I don't see much risk in waiting for AMAT guidance. With '98 uncertain, any move up between now and Nov. 20 will probably be a dead cat bounce caused by happy shorts covering.
Last year I established entry points for semi-equips, but EPS and sales were not involved because I had no idea what they would be near term. I still think valuations based on cash, book, market leadership, historical valuations, and long term prospects may be used to establish entry levels. Unfortunately, my view is that AMAT, KLAC, and NVLS have a significant downside if '98 sales and earnings plummet. EGLS, LRCX, SVGI, and UTEK have not done as well so they have less downside risk.
I will buy more EGLS at $16, LRCX at $25, and SVGI at $20. I am considering $22.5 - 27.5 as an entry level for AMAT. I have positions in all 7 semi-equips, so I don't have 3 levels of prices. If one has no position, establish entry levels and nibble at some of these prices if you must, but I believe that the situation is set for the AMAT CC to move these stocks significantly. I just don't know what the direction will be.
Cary |
