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Technology Stocks : Tower Semiconductor
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To: Gary Ku who wrote (533)12/2/1997 12:10:00 AM
From: virgil vancleave  Read Replies (3) of 1853
 
just a little number crunching here on valuation. valuation ratios are used when finding the bottoms in stocks and based on what i calculate 10 could very well be the bottom unless things chang drastically. sales in the last quarter were about 35 million. not bad. for numbers sake and the lower revenue statement they made, i will use quarterly sales of 25 million, a 28 percent drop which i think would be on the high side and not only that the lower sales should be temporary if at all. now the numbers i will use stock price of 11 for ease of rounding.
11 x 13.9 million shares - cash of 5.46 per share + debt (effectively 0)
divided sales of 100 million(yearly) gives us a enterprise valuation of .77. 1.5 to 2 is normal and i used very conservative numbers. at 11 we are trading at 2 times cash from last quarters earnings. and margins last quarter were 29%.
definitely not a high flier, but if you are a long term investor the rewards here could be pretty awesome.
now if the company has even lower sales, we should move up from here quite easily as expectations seem too low to me.

any other opinions out there? how often do you find a company with margins greater than 20% selling at a price to sales ratio below 1. every time i found them before the price eventually moves significantly higher. look at hdco for one when it was 18ish about a year ago.
good luck all. hope the analysis helps.
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