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Technology Stocks : USRX
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To: David Lawrence who wrote (10617)2/7/1997 3:56:00 PM
From: Jeffery E. Forrest   of 18024
 
Fishin' Time

Though a few of the stocks within the group had run ahead of their fundamentals during the most
recent advance, we believe that the pendulum has now swung too far in the other direction. In other
words, it is time to do a little bottom fishing. Those stocks which stand out as long-term buying
opportunities are U.S. Robotics, Shiva, Cabletron Systems, Vanstar and Three Com. As
depicted in the table below, each of these stocks sport a relative p/e below the industry average and
trade at a steep discount to their long-term growth rates.

Stock
P-E/LTGR*
Relative P-E (to S&P 500)**
U.S. Robotics (USRX)
57%
112%
Shiva (SHVA)
57
132
Cabletron Systems (CS)
73
107
Vanstar (VST)
74
91
Three Com (COMS)
74
133

*Historically, networking stocks have traded at close to 100% of their long-term growth rates.

**Typically, stocks in the industry have traded at relative p-es of near 200%. The current average is
167%.
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