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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: gcrispin who wrote (19657)	9/27/2004 1:59:56 AM
From: Spekulatius	Respond to of 78688

re IMOS - difficult to value the company/stock due to the volatility of their business. Stock seems cheap if one anualizes their last quarterly earnings (PE around 5). IMOS business (as well as it's peer SPIL) is a contractor for packaging and testing, a very competitive and capital intense business with gross margins south of 30%. Because of the business IMOS is in, they will have problems to generate Free Cash flows. For those reasons, I don't like the business prospects of IMOS too much, but i do acknowledge that it may be a good play on a recovery in semis. For a semi company to be investment grade (at least for me), I like to see gross margins of around 50% or more, which is only consitently achievable by companies with a sustainable competitive advantage (MXIM, LLTC, ADI, ISIL,TXN,ALTR, XLNX fall into this category(.