>INTC will not get a PE of 25. The historical range of INTC PE is 8-22, and we are at the high end.<
I agree and disagree. While I think that the stock can not likely sustain a PE of 25, I do think that it's quite reachable. But, no, it'll probably not be able to hold there.
As far as the historical PE goes, I really don't think that it's representative of what the co. should be valued at. Why does a co. like say, Disney or McDonald's, trade at multiples greater than INTC? I'd guess it's something about the blue chip, Americana allure of such stocks. But the fact that INTC was largely overlooked by the market until the most recent phase of its history does not establish strict limits on its potential. Intel will grow more consistently than any of the Dow Industrials, it's in a very rapidly growing industry, it's well managed, etc., etc., blah, blah ... the old rules just don't apply here I believe. While you list 8-22 as the historical PE range, is it not possible we will look back at the 5-yr. range in 2001 as being something like 15 - 25 or 26?
Relatively sustained compound growth will demand good multiples, in my opinion. |
