As you point out, almost without exception, PE's have been compressed to some very low levels for most stocks in the "semi" universe.
We have had 1 exception in the SOXM grouping however, which is CREE, that has been having a big pullback in price, but it has taken a rather long time to do so, and in the process, PE, LTG, and PEG have been ratcheting down.
The posting this past Friday has PE at 15, LTG at 22, and PEG at 0.67. CREE price closed at 28.34. Even so, out of the SOXM, PE at 15 is the highest, and LTG is "out of sight" compared to the others.
Back in Dec 2010, CREE was selling a little over 70 and the PE was 31, LTG was 22, and PEG was 1.22. CREE had those kind of numbers because it was in the "LED" business which everyone thought was "the cats meow". Now it doesn't look so good. CREE has been getting sell recommendations and this is the latest from Marketwire.
<<(Sep 22)The LED market is facing significant headwinds of late. The current downturn in the LED market is largely due to reduced prices for LED-based TV backlight and lighting systems. This is because of inventory adjustments, and increased competition from more backlight makers entering the LED market. Reflecting on the industry in general, Cree CEO Chuck Swoboda believes the huge increase in chip production to service LED backlighting applications in recent years has put pressure on the rest of the market.>>
So CREE is down well over 40 dollars a share since last Dec. The best of the shorting opportunity is over, but there may still be reduced share price going forward. CREE stuck out like a "sore thumb" in the weekly postings for a long time. Another example of the expected high growth areas having a tough time with subsequent reduction in PE levels to the "norm".
Don |
