Good Morning Kirk,
After seeing intc climb to 26 - 27 again on normal guidance, Csco jump on beating lowered guidance, and now Amat once agin pop over 20 on guidance of 5 % less, it appears to me that these companies are being bought and now in favor.
The sector has been out of favor for 14 years.
During that time balance sheets and many mergers have formed solid companies with stable growth - no longer brutalized by what the PC cycle did.
Its a maturing industry that has embraced both buybacks (more than enough to cover the options given out )and a dividend policy that grows and gets better (with payout ratios low, so that can continue to grow).
Add into that mixture, the scramble for yield in a zero interest rate world for a long time mid 2015 to mid 2016 = A LOT OF MONEY IS FINDING A HOME IN THIS SECTOR.
It is amazing how high this sector could go.
If you consider what we experienced back in October of 1998 to March of 2000 - a once in a life time distribution blow off - AND IT TOOK LESS THAN 18 MONTHS.
I'm hoping that the money chasing this sector morphs into the stories about the wealth being made by many.
That's the kind of word that allows multiple expansion.
As the industrial world replaces old equipment and buys leading edge (look at 20 nm fab shortage now existing) the earnings will get better amongst vastly fewer players. They may just get explosive.
Add to that dividends and fortress balance sheeets - there is a lot ot write about from the sell side boys.
I'm thinking the big leaders are poised to break out (intc,amat,csco,msft,klac,lrcx) and the secondary stocks will follow plus or minus 2-3 weeks ( ter,adi,mchp,avag,veco) .
Heck look at sndk and mu already multi baggers!! Why,because the oversupply has been eliminated by BK's.
Then the trertiary stocks will run (aehr.cscd cohu,brks,isil).
When it becomes clear that competiton is price has been replaced by get in line for our production to make you a spot for equipment it could be we even have "multi quarter vision" nah say it aint so !!
I can see a five wave up on Amat followed by a three wave and now hopefully a break out into 3 of 3 up
screencast.com
We need a breakout here in a few key stocks and we'll be reading about those who wished they had bet the farm - we'll also read about the few of us who have.LOL
I'VE BEEN SAYING THAT A LONG TIME AND I'VE BEEN WRONG - OR IS IT EARLY??
All I know is the longer a consolidation takes the higher price goes.
Here's to hoping we'll not be able to buy them lower - I'm ready !!
Bob |
