Paul, re <But two years from now, five years from now - even that $250,000,0000 is going to look like cheap price to pay for 2.5 million shares.>
Intel has been a superb investment over the past five years. BUT,
the share price (adj. for splits) has gone up MUCH MORE than sales or earnings. Over the past 5 years 11/92 to 11/97, the stock price has gone from 9 to 75, this is an average increase of 53% a year.
For example, lets look at the rate of increase in sales at Intel
Sales in 92 to 97(est)in billions: 5.84, 8.78, 11.5, 16.2, 20.8, 24.8
This is a growth rate in sales averaging 33% per year. Unfortunately, however, it starts out at over 50% and ends up at under 20%. And do you know any analysts who are predicting that sales will be up 20% in '98 vs. '97.
Now look at earnings in billions: 1.07, 2.3, 2.3, 3.6, 5.2, 6.8
Thats an average increase of 45%, but, again, clearly declining from that rate in the last year and as predicted for next year, since only a 12% gain is predicted.
In short, the stock price has increased at a rate (53%) much higher than either sales (33%) or earnings (45%). Furthermore, the sales and earnings forecasts for next year are WAY WAY WAY below these historical averages.
Back in November of '92 there was 0.65 billion of sales for every dollar of share price. Its really out of whack now at only 0.33 billion of sales per $ of share price (Yes, even at 'just' $75).
The market has a way of correcting these imbalances eventually. Think about it.
Petz |
