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

To: patroller who wrote (1638)	7/31/1998 4:52:00 PM
From: 18acastra	Read Replies (1) \| Respond to of 2542

Today's the kind of day where the giant valuation spread between Solectron & Jabil/Flex shows up. Solectron down 2 points, and JBL and FLEXF only slightly down. JBL, by the way, was up most of the day, as much as $1.5 at one point. Seems like buy JBL/FLEXF is still the answer. For those nervous about stock market (like me) can hedge with some amount short SLR or other hedging strategies. Like SLR as a business, but valuation spreads still sem way out of line. Jabil is forecast to make more than SLR in Q4 1999, but JBL is $35 stock, SLR is $48 stock. Flextronics reported $.54 eps last q, but add back $.03 eps for adverse foreign currency and $.04 non-cash goodwill amortization, and you get $.61 "normalized eps" for apples to apples comparison with SLR. SLR is not forecast to do $.61 until Q4 1999. SLR is a $48 stock and Flexf is only $40. Still doesn't make sense to me. Alternatively, Flexf is at 17x run-rate last Q "normalized EPS" ($.61*4=$2.44) for a company that will grow 30%-40%. Solectron is 22x FY 99 estimates of $2.20 and growing same rate/slightly slower. My opinion.