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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (57056)	12/6/2001 2:01:05 PM
From: Jacob Snyder	Respond to of 70976

re: momentum will take AMAT through $50 to 2001 highs and possibly slightly higher AMAT 2001 high was 59 in April. So, you're predicting we get to the low 60s soon (in 1Q02?). In 2001, your guesses have been better than mine, about ST peaks. I have a tendency to make lowball guesses, and sell too early. I do better with guessing bottoms than tops. The 2001 bottom was 27 in October. I calculated a P/S of 2.6 then (someone check my math, please). That's not too far above the 1998 trough P/S of 2.2, but a lot higher than previous troughs, which were at a P/S of about 1. If we hit 62 in 1Q02, what will the P/S be? Not only will the stock have more than doubled off the 2001 trough, but the 12M trailing sales will have dropped substantially. The last Quarterly earnings report had sales of 1.26B. Annualize that, and the P/S is = 62/((1.26X4)/.854) = 10.5. I'm quite certain a double-digit P/S in AMAT is not sustainable, even in the best of times. It's absurd, given current conditions. It'll still be absurd next year, even making the most optimistic possible assumptions about the near-term future. When momentum battles valuation, valuation always wins (eventually).