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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: Hank Stamper who wrote (6224)7/26/1998 9:20:00 PM
From: MrGreenJeans  Read Replies (1) of 42834
 
Amat / Klac

<<The fundamentals are as bad or worse than the last bottom in the semi conductor capital equipment business cycle yet the stock price is way higher than the bottom last time. This suggests that the price really ought to be a lot lower than the 30ish it's at now. It really 'should' be in the low 20's or lower.>>

I agree with your comments. I too believe that Amat ought to be priced lower than 30ish especially because the earnings and valuation seem out of alignment. But the fact is that the market is pricing the stock at the moment at 30 so my / our opinions are wrong...at least in here.

<<But, the brokerage recommendations are generally "buy" and the institutions are into the stock and holding on. There is a good chance that the institutions will wake up and start selling the stock down to a level comensurate with its fundamentals. I've nibbled at AMAT (at 27) but will not buy more unless it goes below 25 or, there began to appear real signs that the chip makers were beginning to build new fabrication plants.>>

Perhaps, but have you considered the risk / reward ratio with this particular stock. The upside may be 2:1 or 3:1 or better in the next upturn. I suspect any purchase below 35 or even 40 will turn out to be a good investment in the long-term.
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