Hi Gene,
I don't really follow the Dow. I feel the S&P 500 is more a proxy for the market. It closed at ~ 958 yesterday on '97 EPS of ~ $45.50 (which represents 10% growth over '96 numbers) giving a trailing PE of 21.05. Going forward, for '98 EPS expectations of $48.00 (5.5% growth over '97) gives a forward PE of 19.958. As far as what is a correct/fair "price to pay" in this interest rate environment, I'm not sure. Can anyone speak to this issue?
Looking at the situation without considering the interest rate environment, paying almost 20 times earnings for approx. 6% growth doesn't sound like a proposition that Warren Buffett would jump to take the long side of the trade. I understand that we can't really separate the interest rate environment from the stock market.
BB & GM,
Thanks for your comments. I agree totally that AMAT is a good investment over the next 2ish years, meaning if a person has a long-term view. It's the near-term that is bothering me. That said, stock markets can be crazy and usually are, so predicting the short-term is hard-work, if not impossible.
BTW, Lam's CEO, Jim Bagley, was not bullish for '98 on their latest CC, 21 Jan 98.
Regards,
Teri |
