Ian and all,
Re: "I looked at P/Book and P/Sales ranges for 1996 for a subset of the key companies - the most recent pessimistic year for Semi Equipment companies. From those ranges, I extrapolated a price range for 1998 assuming that its outlook is equally pessimistic."
I can't think of any better parameters than P/Book and P/Sales. If no one else can either, we could just verify the data from the individual companies.
Somebody needs to slap me hard or something because I am more bearish than I've ever been on these stocks, and I don't want to be, partly because I still own alot of them. AMAT would have us believe that the outlook is relatively rosy. I have a difficult time believing that when almost nobody is making money on DRAMs and even INTC isn't short of capacity. So, new purchases will be mostly for technology upgrades, and how far can technology upgrades take revenues and earnings for AMAT, say? IMO, not far enough. Here are some tentative buy targets that I/we've been "playing with". Comments are appreciated.
AMAT 22, 18, 14
EGLS 12ish
KLAC 28, 24, 20
LRCX 20
NVLS 25, 20
SVGI 18, 16
UTEK 18, 16
ORCL 20, 17 (already bought @ 23)
EFII 12, 10
Other random thoughts. What happens if/when one of the Big Three (AMAT, NVLS, LRCX) warns? IMO, one of the biggest bull-case arguments for the semi industry was that Asia was growing at the speed of light. Now SE Asia is sick and growth may well slow to ~ 4% for 1998, and their financial system is screwed to hell and back. I, personally, don't think SE Asia will die, but I'm beginning to doubt that it will bounce back as quickly as I had earlier hoped. I think Brian mentioned SENTIMENT, and I agree that usually the best prices occur when everyone hates or is scared to death of a sector. I think we're getting there.
Regards,
Teri
PS. I'll assist in verifying Book values, etc., but it seems the important thing is just to buy while the bargains are here, but buy slowly, because they may be with us for awhile. Comments/criticisms on my ramblings are welcome. I'm thinking MU reports tonight. If so, we get another view.
Oh yeah, forgot something, I caught it when you said your data came from a free source. |
