I was thinking of buying some more JBL.
Then FLEX dropped, and JBL bounced, so on Friday morning I picked up
some FLEX at just above 33. FLEX is trading at a significant
discrepancy to JBL, and SLR valuations, and should trade to at least
at 30% higher than CLS ( IMO 40-50% higher, since they have better
businesses and customers- the recently acquired IMSX business is risky
and should be valued lower).
Here are analyst estimates for the next several quarters, and the current stock prices:
Actual Current
DecQ MarQ JunQ Stock Price
FLEX 0.34 0.32 0.35 34.00
NovQ FebQ MayQ
JBL 0.25 0.25 0.29 33.50
NovQ FebQ MayQ
SLR 0.26 0.26 0.29 42.81
DecQ MarQ JunQ
CLS 0.27 0.24 0.28 27.12
Interesting to see the seasonality in the estimates... it is possible
the seasonal decline/leveling in revenues and earnings may be offset
by the ramps of new programs.
Solectron valuation sticks out like a sore thumb, but they're getting
the big cap premium the market seems to be handing out these days.
(Some day, I think all these stocks will get the big cap premium.)
By my analysis, I like FLEX the best at these current values.
Thats why I think the correction for FLEX may be over now, and almost
certainly will end if SLR and JBL report good quarters with good
forward looking information on March 15/16. FLEX will follow
the sector higher, and if we eventually hear about some telecom deals,
I think they will get their fair share, and should trade higher. Some
day, I think FLEX should get to a 20% premium to SLR stock price,
based on the higher earnings stream per share, not to mention a
potentially higher growth rate from a smaller revenue base. That
would put FLEX at 50 compared to SLR's current price of 42.
This was enough discrepancy for me to pick up some FLEX shares.
Paul |
