Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 267.87

-0.6%

Dec 5 9:30 AM EST

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To: Morebull who wrote (30334)	5/20/1999 12:05:00 PM
From: Sun Tzu	Read Replies (1) of 70976

Sorry for the delay. The earnings were better than my expectations of 34 cents, but the book-to-bill number was very disappointing (to me). The best I can see AMAT doing over the next 12 months is $8.3B in revenues. This is a lot higher than the current street expectations, but I think is doable. Based on this, the positive surprise and the momentum may carry the stock as high as 100 sometime within the next 12 months. BUT this is the very best scenario in which all the right things happen and nothing goes wrong. Even so, I don't think the stock can stay at such high valuations for long. Investing is a matter of looking at risk adjusted returns, and for me AMAT is not worth it at the moment. Historically, AMAT hardly ever stays above 4.5 times preceding 12 month revenues, or twice next year's revenue (the average valuations are much lower for both of these numbers). Accordingly, AMAT is so overvalued at the moment that I can't recommend it. Good typical buy valuations for AMAT are 0.7~1.1 times sales at the bottom and about 2~3 times sales in the middle of the cycle. Good luck, Sun Tzu

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