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Technology Stocks : Flextronics International (FLEX) -- Ignore unavailable to you. Want to Upgrade?

To: John Morelli who wrote (684)	6/2/1998 4:40:00 PM
From: kolo55	Read Replies (3) \| Respond to of 1422

I'm getting gunshy of predicting a target price in this sector. The one constant seems to be that as some sage remarked: "I predict that stock prices will vary." By December, it should be apparent that the company is going to earn $2.60 to $3.00 for the fiscal year ending next March, versus the current consensus of $2.42 or so. At lows the market seems to value FLEXF and other quality ECM stocks like JBL and SLR at 12-13 times forward earnings, and at highs, the market seems to value at 22-25 times forward earnings. The consensus for FY 2000 starting next April is now about $3.04 for 25% growth over $2.42(I think this looks awful low). But given the historical track record, one would estimate that the stock price would fluctuate between 37 and 76 based on this estimate. If next years consensus estimate climbs to 25% over the $2.80 or so I actually think the company can earn this year, then $3.50 is a better number for FY2000 (starts next April 1). Then we would see a PE range of 12-25 times this, or a stock range from 40 to 90 by early next year. And given the wild and wooly swings in this sector, we'll probably see the entire range of these prices every 90 days. Hang on to the reins, its goin' to be a bumpy ride. Of course, there is the outside chance that cool rational thought may prevail, in which case the stock should trade at about 25 forward earnings. In this scenario, the stock would be trading in the 80-100 range by early next year. And people who bought the stock in this price range would still make nice money on their investment if held for 3-5 years. But I wouldn't bet on this outcome. Irrational swings of 50+% seem to be the norm for the sector; Why?? I have no idea. So look for great entry points, like now, and maybe consider lightening up in non-taxable accounts after the 50% up moves that seem to happen every 90 days. You would think that enough people would begin to play the swings, that would eventually dampen out the swings, but no evidence of that yet. I hope you realize that in this post, I am talking with 'tongue in cheek'. Paul