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Technology Stocks : Semtech (Nasdaq:SMTC) -- Ignore unavailable to you. Want to Upgrade?

To: Stu Bishop who wrote (1133)	8/23/2000 12:45:46 AM
From: Jeff Bond	Respond to of 1225

I'd say ADI would be another good investment. I don't think MRCL is a bad one, but relatively speaking I think it is technically an inferior company to both SMTC and ADI. It might also help to establish the percent of operations being pumped into R&D. If a company is showing strong earnings growth, at the expense of stiffing R&D, then they are foregoing the future for the present. You get the idea, take a look at R&D as a percent of earnings to get a feel for how much a company is investing in the future. You could also look at it this way, then again the past does not always predict the future, blah blah blah, etc ... siliconinvestor.com All things being equal, I'd say either SMTC or ADI is a good investment. Give the edge to ADI on being the leader, give the nod to SMTC for being the scrappier up & comer. If you like security, ADI gives a little better shot at that; if you like to swing a little more for the fence SMTC is the way to go. Stu, research USAR, their product lines, and their technology :o) Regards, JB P.S. Leeza, listen in? Got any notes to mull over? Would appreciate, thanks, JB

To: Stu Bishop who wrote (1133)	8/23/2000 2:44:30 PM
From: jbe	Read Replies (1) \| Respond to of 1225

As a first-time poster to this thread (which I have followed religiously), I probably should not even try to address your dilemma, Stu. But I will, anyway, even though I cannot hope to provide information/recommendations to match Jeff's. They say you should only buy stock in businesses you know/can understand. If I obeyed that rule, I would never buy any stock, most particularly, I would never buy any technology stock. But I have not done too badly buying stock based on the standard parameters by which all stocks are measured: growth rates, debt ratios, valuation ratios,etc. What I have learned about SMTC specifically I learned from reading this great thread, only after I had already bought shares in the company. I bought them at the market top this year, based on such figures; held on through the market deflation; and now I am up 36% on SMTC since purchase. Your question spurred me to take a look at the competition, again purely on the basis of the general numbers (not t he particulars, which I do not really know). After this admittedly very superficial look, I would say it was pretty much a toss-up. See, for example: quicken.com Bear in mind that the above places ADI in a different (slower-growing) industry than SMTC & MCRL (giving ADI a higher growth "score"), and also that it does not take into account the latest quarter. In any event, up until that point, SMTC was superior to the competition on several parameters. On the other hand, I am concerned about its weakness on two others: long-term debt/equity ratio, and ROI. It appears to have acquired that whopping debt only recently. If management took out a large loan, then my question is: why? If the high debt is the result of acquiring a heavily leveraged company, then this could eventually hurt the bottom line (see the ROI number). I am also concerned about SMTC's escalating p/e. It is still relatively "low" by industry standards, but the industry standard is dizzyingly high. (Of the fourteen stocks I own, only four have p/e's in the SMTC category; five, on the other hand, have p/e's well under 20.) ADI, which has not done as well price-wise as SMTC in the last three months, has a more "normal" p/e (75 at the moment). All things considered, I personally would not expect a continued sustained price rise for any of the three; another deflation is perhaps more likely. Personally, I would suggest holding on to SMTC, and buying some ADI and/or MCRL as "insurance," in case SMTG stumbles -- or buying stock in a more undervalued company in another industry. In my view, diversification is the name of the game. But I may be all wet. Probably am. :-)