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To: Ron McKinnon (13784 )
From: Dan Zimmermann Sunday, Mar 22 1998 2:36PM EST
Reply # of 13798
Market comments.
Ron,
Many thanks for taking the time to post your comments on the market.
I agree with everything you said although I would like to add a few
things. As we all know, not all stocks go up in a bull market and
not all stocks go down in a correction. While some of the Z's
postions are out of favor at the present time, this could easily
change in a heartbeat. Often, by the time you realize what sectors
are in favor, it's too late to buy them because the stocks are
already overvalued and money rotates into other sectors. Also, not
all stocks in a sector will follow the trend of the sector. Some
will outperform and some will underperform.
We have given back part of our gains, but for the most part, I think
we are holding stocks that will outperform the market averages. The
exception is IOM which I will probably sell next week. I'm also
concerned about DIGI, which is why I recommend that we keep our stop
in. And while the semiconductors are out of favor right now, IRF and
VLSI are trading at lower valuations than many stocks in the group
and at a large discount to the industry average. Because of this, I
think they might hold up better than stocks in the group that are
trading at higher valuations.
In the table below, I have compared the PE, growth rate, and PE/Growth
rate for as many semiconductor stocks as I could find. While I don't
normally trade based on fundamentals, this data gives me confidence
to hold my position in VLSI and I have even decided to buy more if
it declines to the lower daily bollinger band at 16.
Company PE(1) Growth rate(2) PEG(3)
ALSC 29.7 15 2.0
ALTR 27.1 30 0.9
AMAT 25.6 25 1.0
AMD NM 16 NM
ASYT 13.2 27 0.5
ATML 13.9 20 0.7
CUBE 17.7 35 0.5
CY 48.3 17 2.8
CRUS 29.4 18 1.6
EGHT NM 40 NM
ESST 19.2 17 1.1
IDTI 33.6 15 2.2
INTC 23.8 20 1.2
IRF 18.1 25 0.7
JBIL 18.8 30 0.6
LSI 20.6 20 1.0
LTXX 20.2 20 1.0
MU NM 15 NM
NMGC 14.3 32 0.4
NSM 70.9 20 3.5
SMTC 16.5 25 0.6
SVGI 36.2 22 1.7
TXN 22.9 20 1.2
VLSI 18.3 22 0.8
VTSS 38.6 45 0.8
XICO 50.6 15 3.4
XLNX 28.4 26 1.1
Semi avg. 25.6 20 1.3
Notes:
(1) Forward PE based on 1998 calendar year mean estimate
(2) Based on analysts surveyed by First Call
(3) Column 1 divided by column 2
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