why I'm short amat.
to sum up: It's overpriced.., unless they add a .com to its name.
first, look at btb chart provided by Xy Zhao:
geocities.com
observe:
a. 5/97, btb ~ 1.1, 8/97 btb ~1.05
now look at amat 2 year chart:
quote.yahoo.com
**5/97 amat @ ~30, 8/97 amat @ ~48, peaking at ~52 shortly after.
btb amat
1.10 30
1.05 48
0.84 45.5 today..
****btb correlation is out of whack, momentum player feeding frenzy
b. back to the btb chart:
note: that every move up of about of 30-40% has been followed by a sizable decline.
sep-oct btb of ~.57 to .84 is a 47% improvement. Given the decline
in manufacturing, over capacity/cutbacks from most chip makers and the
choppy historical pattern of btb, never mind asia in the toilet, I see no
reason to expect btb to continue to improve without more pull backs.
****High probability that btb will pull back in coming months.
c. pe expansion
5 year average pe: 20.6 -Zacks
current pe: 67 (yahoo)
pe on this yr eps 75 oct-99 (price of 45/eps of 0.60 *)
pe on next year's 27.8 (oct-2000) 45/eps 1.63
*this year eps from today's goldman announcement: 0.60 for 1999
next year eps from Zacks
****assuming it's rational to write the next year off AND that the y2k
expectations are solid, amat's pe is still high.
using 5 year average 20.6 *'s 1.63 = a price of ~34
also, 24,000 shares sold 9/8/98 at 25 by insider Paul Low
32,000 " " " " 11/20/98 at 39 by Michael Ofarrell
So, besides interest rates being low and momentum madness can some one
tell me why I've made a bad decision?
thanks,
-Kevin
ps. Goldman's estimate increase only brought them in line with consensus. |
