Joe,
You asked me for my "gut" feel about what is going to happen in the
next year or two. I feel strongly it will be "upward and onward".
High tech is a growth area that is only in its infancy. I think by
the middle of 99, or before, the "semis" as a group will make new
highs similar to 95 and 97. High tech is one growth area that has
a long way to run. Getting to the next high though may be rather
choppy. Right now the momentum is back just like it was starting
in April of 97. Whether it is going to have the 4 month upward run
without a break that it did in 97 I don't know. I tend to think it
might be a little choppier. I also believe, however, the semis are
still way undervalued as a group compared to their growth rate.
I am repeating a post I made previously about the performance of the
group (37 stocks I have been following) comparing the highs of each
stock in 95 compared to the high in 97. Two of the stocks, CFMT and
TRKN, I did not have data to make the comparison.
First of all, note the extremely wide disparity in performance
within the group. All the way from 632 percent to -68 percent.
Incidently, SUBM would have to gain 315 percent to get back from its
1997 high to its 1995 high. With its close of 1.81 on last Friday,
it would have to gain 773 percent to get back to its 1995 high.
Notice the average increase of the group from 1995 to 1997 was 23
percent. Not a very substantial gain for a 2 year period. As a
matter of fact this did not nearly match the average market gain over
this period.
To me, one of the messages from the list is that you better be a good
stock picker over the long term if you are going to buy and hold. On
many of the lower performing stocks, very good profits could have
been made by trading them at the right time.
Of all the stocks in the group, PLAB is one of the best, if not the
very best, in using the buy and hold strategy. That is because it is
one of the few in the group that has had smooth upward earnings gains
over the period and the stock price has followed suit. PLAB from the
period of Jan 1991 to Jan 1994 bounced around from approximately 3 to
5 dollars a share. Then in Jan 1994 it began its rise, with some
peaks and valleys, till the present close of 28.38 on Friday. That's
essentially a "6 bagger". Not bad to have a 600 percent gain in 4
years.
If you look at the bottom part of the list, several very good
companies appear even though in 1997 they did not reach their 1995
highs. FSII is one of those. I wish I knew how it is going to do
in the next 2 years. We are fast approaching 3 years out from its
glory days in 95 and it has done very little in the interim.
Just one more observation and then I will knock it off. I will pick
on UTEK, but many other stocks fall into this category. You could
have bought UTEK for $20/share in Jan 1995. You could have bought
UTEK at $20/share in Jan 1998 for a zero percent gain over that three
year period. If you look at the chart, however, over that period,
buying and selling at the right time could have meant a lot of
profits.
To me, the table below says that if you are going to use the long
term buy and hold strategy in the tech stock area, you better be a
very good stock picker. There are only a very few very big winners.
The other thing it tells me is that very good money can be made over
the shorter term, but you must know when to buy and sell. The long
term buy and hold strategy will not work.
1995 1997
HIGHEST HIGHEST PERCENT
SYMBOL COMPANY PRICE PRICE CHANGE
CFMT CFM Technologies
TRKN Trikon Technologies
ETEC Etec System 9.17 67.13 632
SFAM Speed Family 18.25 60.38 231
PRIA Pri Automation 22.38 58.50 161
VECO Veeco Instruments 29.13 72.50 149
AMAT Applied Materials 29.56 54.00 83
ASYT Asyst Technologies 26.50 47.25 78
MICN Micrion 16.00 27.50 72
BRKS Brooks Automation 24.00 39.69 65
KLAC KLA Instruments 46.91 75.63 61
COHU Cohu 35.75 56.00 57
PLAB Phototronics 20.24 31.38 55
NVLS Novellus Systems 43.19 64.69 50
TER Teradyne 42.00 58.75 40
NANO Nanometrics 10.13 13.63 35
CMOS Credence Systems 40.25 54.13 34
KLIC Kulicke & Soffa Industries 44.38 57.25 29
IMSC Integrated Measurement Systems 16.50 20.00 21
HELX Helix Technology 27.00 32.19 19
WFR MEMC Electronic Materials 38.25 38.75 1
LRCX Lam Research 71.75 66.31 -8
EGLS Electroglas 39.75 35.25 -11
ASEC Aseco 21.88 18.88 -14
GSNX Gasonics 26.83 23.06 -14
TGAL Tegal 13.88 11.25 -19
SVGI Silicon Valley Group 48.38 37.75 -22
SMTL Semitool 36.00 26.88 -25
UTEK Ultratech Stepper 46.75 34.38 -26
PHTN Photon Dynamics 12.00 8.38 -30
IPEC Integrated Process Equipment 54.50 37.19 -32
WJ Watkins Johnson 56.25 37.25 -34
FSII FSI International 37.75 23.19 -39
LTXX LTX 14.00 8.19 -42
MTSN Mattson Technology 31.13 16.00 -49
GGNS Genus 16.75 7.88 -53
SUBM Submicron Systems 14.00 4.44 -68
TOTALS 1081 1326 23 |
