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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (865)	11/13/1997 4:30:00 PM
From: kolo55	Read Replies (3) \| Respond to of 2542

I agree we are moving to undervaluation. But hopefully this morning was the bottom. I'm seeing a lot of tech stocks bouncing strongly on volume off the price points they hit several weeks ago on the Monday sell-off. I'm not a technical analyst, but a host of ECM stocks look oversold here. If we could just "forget them" for awhile, I think the current valuations look great. In particular, the fall of Jabil has made it an attractive stock again based on most valuation measures. Given the almost certain growth in revenues next year, the company should beat the reduced earnings estimates now floating around. The stock is trading around 15 times my guess for next year, and I've heard numbers higher than mine. The PSR has dropped to 1.0, and I don't think one of the sector leaders should trade that low. Flextronics has held up somewhat better, and I think is bouncing strongly today. If Jabil starts trending back up, I think a lot of the sector stocks will follow. On the world-wide leader question; although I think Solectron is one of the best managed companies in the sector, you have to pay for that. My preferences have been for the "break-out" companies, Flextronics, DII Group and now Jabil. They should report the fastest growing revenues and profits on a percentage growth basis and have the world-wide coverage. Their plants are as large or larger than the big two. So I agree with some others on this thread that these stocks are the place to be long term. The smaller caps have really gotten hammered, and may be worth looking at for "bargains" based on "turn-arounds". Almost the whole sector looks attractive once again; its last March all over again. I guess I don't buy any kind of fundamental ECM sector slowdown story. I don't see it. But I do think the technology leader stocks that have lead last year and earlier this year are in for a rough period. This may spill over to this sector. I think Intel and many of the semi companies, the computer makers particularly Dell and Gateway, and maybe even Microsoft could be looking at flat stock prices over the next year. The worst is the semi-equipment makers; even with the carnage in that sector over the last several months, I don't see a bottom there until next April-May when some really awful earnings reports will hit. All this may spill into the ECM sector. I still think that in the tech sector you want to be in networking, telecom, new consumer electronics applications, and the best way to play these trends is the ECM sector. The stocks here have the best risk adjusted reward. So I'm holding for the most part, and picking up a few calls on my favorites. Good luck all, Paul