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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (7896)	12/29/2002 11:57:18 AM
From: Return to Sender	Read Replies (2) \| Respond to of 95525

I get an AMAT P/S Trough Valuation of $4.80 based on a median semiconductor industry P/S of 1.9 at trough bottoms. Cary, the article uses the btb as a measure that may help to point out yet another bottom for the industry. It fails on many levels. It loosely discusses the SOX, SCE stocks and semiconductor companies as if they were all the same but when it comes to moving higher and lower they pretty much do so all at the same time. Your contention that when AMAT earns as much as $1.20 a share again that a stock price peak of $24 to $36 is too low is probably accurate. Unfortunately, I have to point out the fact that despite the up and down swings in this bear market that we have never reached trough bear market valuation levels for the stocks. Lets use AMAT again as an example. First I want you to look at a 5 year chart of the stock: stockcharts.com[l,a]mhclyiay[d19950101,20021231][pb50!b200!d20,2!i!f][vc60][iUb14!Uk14!Ul14!Lp14,3,3!Lf!Lc20!Lah12,26,9]&pref=G In the last five years the stock has been as low as $2.31 but the low in this bear market has been 10.26. That's 4 times higher than the low price almost 5 years ago. Now lets look at the current valuation of AMAT. The company has a price to book of 2.78 which is slightly higher than the historical mean of 2.6 at cycle bottoms which may support a bullish point of view: multexinvestor.com wrhambrecht.com Unfortunately there are other measures of valuation which do not support the bullish viewpoint. We won't discuss P/E ratios because most people that read this thread don't think it is a valid measurement. If it is though we are 3 to 4 times too high over trough prices. Now maybe it is not likely that AMAT will fall back to 5 year lows especially if the btb has hit a low and is ready to rise back above 1.00. But for the sake of argument lets say that will not happen and instead the btb bounces along bottom making investors wonder if these stocks are not still valued too richly. AMAT has a P/S of 4.50. Industry mean at cycle bottoms is 1.6. finance.yahoo.com Divide 1.6 by 4.50 x 13.50 = $4.80 $4.80 is a probable price for AMAT if it reaches a cycle low P/S value. My contention is that there is room for these stocks to move lower first before heading for a true bull market cycle recovery. If you would like to discuss your cycle model peak valuations I know that I and many others would enjoy reading it. Once we have oil prices moving back at $20, or below, a barrel we will most likely be in the midst of a new Bull Market. At that time I expect a business led economic recovery. RtS