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Technology Stocks : Kulicke and Soffa -- Ignore unavailable to you. Want to Upgrade?

To: Dr. Ronald Peter Hellendall who wrote (2780)	3/31/1998 9:45:00 AM
From: Dr. Bob	Read Replies (1) \| Respond to of 5482

KLIC has typically led (been the first into) the downturns and the upturns. Since a downturn is anticipated, KLIC looks less attractive (to most investors) than the rest of the sector. Bob

To: Dr. Ronald Peter Hellendall who wrote (2780)	3/31/1998 10:16:00 AM
From: JZGalt	Read Replies (1) \| Respond to of 5482

Ronald, I didn't mean to suggest you are abusing the p/e indicator, but that you might lend yourself to looking at another point of view. I don't happen to believe that looking backwards on cyclical companies or using p/e ratios are a good method of selecting these sorts of companies. They are more suited toward traditional growth stocks IMO but they can be used to sort for "market inefficiency" in pricing as you have done. Not sure what you do with the result however. If you find a "cheap" stock using this methodology, is it cheap because the market misunderstands the company, or are they forecasting troubles ahead for this company in excess of the rest of the industry? You posed this question yourself. Here are a few "guides" that I use without relying on trailing p/e. I try to concentrate on cash flow, price/sales and price/book (after cash levels and long term debt have been subtracted) and compare this to historical norms. In the case of KLIC, it has $4 in cash and no debt. From Baseline over the last 5 years: P/E ratios for KLIC range from a low of 4 to a high of 130. Typical low p/e ratio is 9. P/Sales ratios range from 0.3 at the bottoms toward 2.5 at the peaks. P/Book ranges from 1.2 to 6.6. P/Cash Flow ranges from 3.6 to 26 ROE range 8.4 to 21.2% With a market price of 22 KLIC is selling at: p/e = 11.1 p/b = 1.7 p/s = 0.95 p/cash flow = 8.9 ROE = 21% Although KLIC is clearly at the low end, it is not near the extremes that were reached in the recent past (1994 and 1996). What I try to do is look for companies that are selling at either the historic low valuations (assuming no internal problems). KLIC just doesn't match that criteria yet. I do own some semiequipment stocks but we are discussing KLIC, not the general industry.