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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector
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To: kolo55 who wrote (1446)4/21/1998 5:26:00 PM
From: 18acastra  Read Replies (1) of 2542
 
Fascinating, isn't it?

I remember last year when I was buying Flextronics in low 20's...nobody wanted to touch it while at the same time people were paying $70/share for Jabil. Obviously, gigantic pack mentality. I think in this case, the pack will be rewarded handsomely over time with Flextronics as they are situated in a great position for long term w/ great customers and manufacturing capability in low-cost markets that are difficult to enter.

Jabil to me reminds me of Flextronics last year in the low 20's. Washed out story that nobody wants to touch. Hopefully, patience will be amply rewarded in same manner w/Jabil.

As far as your question about market hating sector last month and last December, that is why I am short Solectron as a hedge. At $44, it is now trading at basically the same price it was before they reported last Q and significantly lowered guidance. So it effectively has a higher multiple on a lower growth rate. Talk about the market being fickle/irrational.

I don't think I will ever understand why this sector is so volatile. Hopefully, over time as investors understand the long-term secular trend better, all the CEM's will be recognized as long term growth stories and trade at more appropriate multiples in a less volatile manner.

My opinion.
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