To: Fortinwit who wrote (5900 ) 6/18/1998 12:26:00 AM From: Gary Burton Read Replies (2) | Respond to
I've been looking at the PSR and PB at the old lows for some of the ones I'm interested in. Haven't bought in yet. AMAT seems still way overpriced relative to its 96 low whereas some others are more realistic vs their old lows For example, KLIC at today's low of 13.88 is trading at about 0.69 PSR (which I define as est June qtr sales annualized and after deducting net free cash (cash less all LTD) from the stock price. The P/B (after deducting 30c for 2 qtr est losses now) is at 1.07. Back at the July 96 low ($8.75) those same calculations were 0.54 PSR and 1.06 P/B and at the 94 low were 0.44 PSR and 1.30 P/B. If one weights 67%PSR and 33%P/B one arrives at 0.81 at present for KLIC vs 0.72 at the Jul96 low and 0.73 at the 94 low. So, if KLIC dropped furthur to 11.63-12.00 area, it would reflect the same numbers at the other cyclical lows.-------- ASYT is currently trading at a 0.49 PSR and 1.23 P/B vs 0.39 and 1.18 at the July 96 low.------ In contrast, AMAT is now at a 1.9 PSR and 3.0 P/B vs 0.73 PSR and 1.62 P/B at its July 96 low. Talk about a 2 tiered market! My first impressions are 1) buy only cash rich small caps that can wait it out or big cap favourites that will rise less than the juniors. Debt heavy stocks (cash net of LTD is a small or even negative % of the stock price), why bother. (LRCX, CYMI, IPEC come to mind). The cash rich ones will zoom back just as much as the latter with less risk.----Then of course if one is inclined to think Bill Fleckenstein is right (www.stocksite.com-see June 17 "contrarian") , you stay away completely since we haven't seen anything yet. Personally, he and Herb Hickey make a lot of sense to me, which is one reason why I'm still on the sidelines on tech. But i must admit to be getting warmed up on some of the stocks like KLIC and AYST and a few others just in case they are wrong.
