B and All, I added some new put positions today in Solectron, Jabil, and Sanmina. All are contract outsourcing cos. for commodity tech OEMs. If the inventory glut in pcs and chips is what I think it is, these cos. will be the first hit. But, even without that, these 3 firms are growing at a rate of 2-7% per year, but selling at multiples of 40-60 times eps. They are up more than 100% with only a small pickup in eps during this manic overproduction run of October/November.
If I'm right, these are layups for 1000-%ers. If I'm wrong, the puts go to zero. It looks like a good tradeoff to me.
Buy far out of the moneys, because these stocks are either worth about 25% of their current prices or they aren't moving down. I'd rather have more cheap under those conditions.
BTW, unlike MU and IBM, these really are good little cos. in a very tough field. They just happen to be grossly overpriced at the peak of their revenue season.
MB |
