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Technology Stocks : Phoenix Technologies (PTEC)
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To: Tim Oliver who wrote (455)1/28/1998 10:29:00 AM
From: Mark Brophy  Read Replies (8) of 3624
 
It's time for the new 1998 contest!

Here are the rules this year:

1) Phoenix is automatically entered.
2) To be eligible, contestants must have posted 3 messages to the Phoenix thread in the past year.
3) Each contestant must choose 2 stocks and write a paragraph justifying each decision.
4) No speculative stocks are allowed. The company must be profitable the last 4 quarters and have price/book < 5 or P/E < 30.
5) The price at closing on Feb. 3, 1998 is entered as the initial contest price. Contestants may retract previous choices any time before closing on Feb. 3 for such reasons as price changes between the initial choice and current price.
6) Maximum 15 stocks are allowed, so only the first 7 contestants are entered.

I'll start with 2 stocks that I believe have been punished too severely by the Asian crisis, which has been completely overblown. You can buy almost any chip company at random at the lowest prices in 12 months.

1) Advanced Energy (AEIS) - They make power supplies for thin films such as chip equipment vendors (Applied Materials, Lam Research, Novellus), disk drive vendors, and other applications. They're gaining market share and the parking lot contained 80 cars last Saturday. They suffered $3m of damage in the Fort Collins rain storm 6 months ago and still have a big order backlog. They raised money in a secondary offering last Oct. shortly before the crash at 32 and the price is now 12 5/8. The CEO/founder/chairman/majority shareholder sold a million shares!

2) VLSI - They sell chips for wireless phones and other applications. Although their customers such as Ericsson have a large Asian exposure, the company is still very profitable. They've ramped their fabs and have had a good profit margin the last 2 quarters, which they expect to continue. The balance sheet is strong and the P/E is low. They repurchased 1.5m shares last quarter at an average price of 21.84 and the price is now 19.
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