"multiyear growth cycle", says AMAT's CEO. In semi-equip? When has anyone had that much visibility? I might believe in the Tooth Fairy and Santa Claus, but I don't believe in semi-equip "multi-year growth cycles".
Multi-year means at least 2. How often has AMAT posted 2 years (8 quarters) of consecutive increases in sales? When has the stock ever gone up for 8 consecutive quarters?
The news in the industry is good. Very, very good. As in....can't get much better. AMAT's quarterly sales troughed in 2Q09 at $1.02B, and have increased every quarter since, more than doubling to $2.30B now. The previous peak in sales was $2.56B in 3Q07. I can see, at most, another 4 quarters of increasing sales and profits for AMAT. At most. That would be mid-2011, for the cycle peak in fundamentals. The stock should peak before reported earning and sales do. Which means it's time to think about getting out, by 1Q11 at the latest.
AMAT has spent a lot of money and prestige on solar, with not much to show for it. Partly, it's because they picked the wrong technology, amorphous silicon. CaTe thin-film, and crystalline silicon, are far ahead of the other solar technologies, in both manufacturing cost, and efficiency (converting sunlight to electricity). Worse, they were beaten within the amorphous silicon space, by a little company I never heard of, Oerlikon.
AMAT had a hard floor at $15 from mid-2004 through mid-2008. For the last year, though, it's been a hard ceiling, with every rally failing in the $14-15 area. It hasn't even doubled off it's 2008 lows, although almost every other semi-equip has done that and better.
I've been adding at 12$, and selling in the 13.5-14.5$ area, for much of the last 12 months. Next time we get up there, and stall, I may let it all go. Goodbye, AMAT.
I'm thinking there is more value in pharm, more inflation protection in oil and gold, and more long-term growth in solar and wind stocks. |
