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

To: Return to Sender who wrote (13126)	1/26/2004 11:28:15 PM
From: The Ox	Read Replies (1) \| Respond to of 95738

Traditionally, you wanted to buy stocks with PEGs below 1 as a good valuation metric. The key was how comfortable you were with the company's earnings estimates (or your own estimation of the company's future performance). Stocks with PEGs over 2 are not at all cheap and most of our group currently fits this criteria. However, PEG is an elusive metric, since earnings estimates can rise substantially over time, reducing the previously high PEG into more reasonable territory. Don's tables sorted by PEG show that many of the SCE leaders have seriously high PEGs but I have expected these to come down with rising forward estimates. A company that hits on all cylinders can reduce high PEGs very quickly. For example, 90 days ago CAMP had next year EPS estimates of $0.10/share and now they are at $0.42. So, if 90 days ago CAMP had a PEG of 3 it would have appeared to be pricey but in reality it would have been quite cheap as growth estimates have soared. I'm picking out CAMP because of the extreme nature of the change (and because I bought it in August and love to brag about my timing on this one<vbg>). My view on the group is that the PEGs are high but not as extreme as they currently appear. I think we will see some raising of earnings estimates over the course of the next couple of quarters for many of our group. If this up cycle doesn't boom too quickly, then long term growth estimates are probably pretty solid at this time. The hardest part to judge is whether or not too much capacity is being put into place now or during the next few quarters? Conversely, will the reluctance to spend in 2003 translate into shortages or rising ASPs due to strong demand in 2004?