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Technology Stocks : Jabil Circuit (JBL) -- Ignore unavailable to you. Want to Upgrade?

To: Robert McHale who wrote (4791)	12/16/1998 7:41:00 PM
From: OldAIMGuy	Respond to of 6317

Hi RMcH, After watching the news tonight, I don't know what to guess. We could view it positively and say that some market *uncertainty* has been removed. Best regards and lets hope for the best!, Tom

To: Robert McHale who wrote (4791)	12/17/1998 12:01:00 PM
From: kolo55	Read Replies (1) \| Respond to of 6317

Seems we had a fight-off between two analysts. Unterberg downgraded, and astonishingly, Keith Dunne at BARS, upgraded. This is after he downgraded this fall, when Jabil was in the 38-40 range, because of stock price appreciation. I imagine some of BARS customers are going to have a hard time rushing out and buying the stock about 70% higher than they just sold several months ago. The stock pushed above its previous high, and then the sellers hit on the downgrade news. But I look at the peers, like SLR, and don't understand why Jabil's stock price is less than SLR's. In the conference call, the company said it expects operating income to increase 7% next quarter, and over 7% in the 3rd and 4th quarters. With this kind of accelerating earnings growth, over 30% per year, we should see next year's estimate in the $3.20-3.30 by next August. And if the rumors of impending contracts with new telecom companies (Lucent and Nokia) turn out to be true, the estimate for the new fiscal year starting September 1st should be in the $3.50+ area. Take 30 times that, and I get a peak target of 105 by next fall. (Of course, I expect a split before then, so the price will be really about 50 or so.) Long term, its smart to keep in mind the rule of 75. Divide the annual earnings growth rate into 75, and it tells the number of years that the earnings will double. At 25%, the earnings will double every three years, at 37.5%, earnings double every two years. I expect the company will increase EPS at least 30% per year, which means the company will double earnings every 2.5 years. Using a run rate of $3.00 by next fall, then in five years, we should see $12.00 a share (conservatively). At that point, we might see only 20-25 times earnings, and a stock price of 240-300. This is a pretty conservative long term forecast. Of course, along the way, there will be ups and downs. But my basis is so low, that it doesn't make sense for me to sell and chase some other stock. I will hold to the point where the stock is definitely overvalued, and my estimate is that the price would have to go over 110 now, and over 150 by next fall, before I would consider selling out. I may miss a trading opportunity, but at least in the long run I am sure I'm on board for the ride. I expect to sell at 300 a share within five years. Paul