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Technology Stocks : Semi Equipment Analysis
SOXX 314.52-0.6%Dec 11 4:00 PM EST
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To: Donald Wennerstrom who wrote (50564)1/1/2011 9:40:37 PM
From: Jacob Snyder1 Recommendation  Read Replies (2) of 95572
 
re: 2011 earnings, LT growth rates, and PEs:

1. There is a tight grouping in the PEs: aside from a few outliers, most are in the 9-12 region.
2. There isn't any relationship between PE and LT expected growth rates. That's because a) nobody believes the LT growth rates, or b) the market is Inefficient, or c) nobody is using forward PE to value the companies. Take your pick.
3. The reason the PEs are low, is because a) we are looking at cycle peak earnings in 2011, or b) we are in a secular bear market and all PEs have been falling since 2000.
4. If COHU is really going to grow earnings LT at a 27%/y rate, and we aren't at the cycle peak, it's a steal at a PE of 12, and we should load up on it, preferably yesterday.

disclosure: no COHU position
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