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Technology Stocks : KEMET Corp. -- Ignore unavailable to you. Want to Upgrade?

To: All Mtn Ski who wrote (710)	10/5/2000 11:47:47 AM
From: SJS	Read Replies (1) \| Respond to of 906

Yes. Agree Tom. I watched some guys reloading 50K shares on the offer move this stock down 10% until they took most of him out at 25.5. We're very near capitulation. People are puking up alot of stuff now.

To: All Mtn Ski who wrote (710)	10/5/2000 5:20:38 PM
From: Czechsinthemail	Read Replies (1) \| Respond to of 906

Tom, The weakness in MU was attributed to a modest increase in production going forward that might limit further earnings increases. Dan Niles added that he expected it would support DRAM prices if expected increases in 4Q PC sales kick in. DELL's comments were interesting because they said they would be reducing prices to stimulate 4Q sales. What people lose sight of is that capacitor sales are primarily a function of the number of electronic units sold; this puts them in a different boat from other companies that need to worry about the price and margin of units sold. KEM's favorable supply/demand imbalance will tend to persist as long as there is a high volume of electronics products produced and sold. KEM and the other capacitor companies should benefit from the traditionally strong 4Q sales season. One point of confusion around KEM is that the consensus forecast for the 4Q is slightly lower than the 3Q estimate. This is not the case for AVX or VSH and is surprising since KEM has shown greater sequential EPS growth than either AVX or VSH. Perhaps it reflects higher revisions for KEM's 3Q estimates following the 2Q blowout. That, and an earlier reporting date, are the only explanations I can come up with for AVX trading at a higher price than KEM. I think it is highly unlikely that KEM's actual 4Q result will be lower than its 3Q. Though KEM has been showing higher sequential earnings growth, which suggests to me greater potential for positive earnings surprises, it is trading significantly lower than AVX on a PE basis and about the same as VSH. Here are 12 month earnings projections and PE figures assuming current consensus estimates through the SEP and DEC quarters: KEM Price $25.43 Sep00E: $2.51 (10.1x) Dec00E: $3.18 (8.0x) AVX Price $26.50 Sep00E: $2.08 (12.7x) Dec00E: $2.66 (10.0x) VSH Price $29.25 Sep00E: $3.01 (9.7x) Dec00E: $3.75 (7.8x) All three are very cheap and most likely these estimates will be increased again following earnings announcements where all three will beat consensus numbers. Assuming KEM's historical PE of about 16x, the Sep00 estimate suggests a price of $40.16; the Dec00 estimate suggests $50.88. Remember that KEM has historically traded at about an average market PE, and the current market average PE is much higher. That tells me that KEM has way above average upside potential and way below average downside risk. I couldn't resist and bought more KEM today at 25 7/16.