Yes, I didn't understand what you were saying at all, sorry. This is very true. We're going to need to see a BTB at 1.4 at some point to see real growth in the sector.
Now, though, I get to talk about semiconductor equipment stocks as "cyclical" rather than "growth". I wouldn't really make the distinction, or at least wouldn't think they fit in what the street calls "cyclicals".. These are , to me, definitely growth stocks (or at least have been traditionally). Although they are undoubtedly subject to huge cyclical swings, their high valuations and technology-driven nature make them more of a growth stock to me. Mostly the street only uses the term cyclical (correct me if I'm wrong) to refer to consumer product stocks.
In other words, future earnings being predicted on the chipmakers' need for totally new machinery (.18um litho equipment, CMP, auto testing and handling, etc.), not a cyclical surge in end-user consumption.
That said, I think the smart money is actually looking at the cycle, while the people losing money are looking at the technology and ignoring the long-term ups and downs. There must be 1000 posts on the various Cymer boards etc. "they have to have this technology, buy now" kind of thinking. |
