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Technology Stocks : DII Group, Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Nevin S. who wrote (1787)	1/27/1999 11:48:00 PM
From: kolo55	Read Replies (1) \| Respond to of 1845

Comments on DIIG from last week's Barron's roundtable: MacAllaster: Absolutely right. It's less work if you do it that way -- for everybody. These are six puppies, really small companies. Three of them are listed on the Big Board, three of them trade on Nasdaq. But call them puppies, not dogs. They are very Rhonda Brammer-type stocks. The first one is the largest, DII Group, which is in the printed-circuit-board business, the outsourcing of electronic products. Its customers are the likes of Hewlett-Packard and IBM. As you probably do know, there are about five of these electronics companies of some size. DII is the smallest, with 1998 sales of something less than $1 billion. The rest of them have really taken off. Jabil Circuit and -- what is that other one -- Solectron -- basically trade at better than 30 times earnings. They had a great year. Most of the group has been moving along at 30%-40% better in sales and earnings. DII Group had done the same, up until this last year, when they hit a couple of bumps in the road. An acquisition turned out to have a bad business. They had a big order that was supposed to come along at the end of the year, but which they haven't gotten yet. They may still get it. But they haven't gotten it yet. So they earned $1.26 in 1997 and they had been expected to earn $1.45-$1.50 in '98. But they actually are going to report $1-$1.10, $1.05, perhaps. Down earnings. The stock, near the end of '97, sold over 30, at 32-33. But of course, when you disappoint people, they tend to sell you. They took this stock down from 32 to about 10. Meanwhile, DIIG has bought out Hewlett-Packard's German manufacturing operation for printed circuit boards, bought an operation in mainland China. They have gotten a $75 million order for telephones. I doubt they'll have bumps in the road this year. The stock has moved up to about $24. Most of the estimates for this year are $1.50-$1.60, but I think DII Group will earn $2 as the sales grow from under $1 billion to perhaps $1.2 billion. And in the year after, to perhaps $2 billion. I think earnings could be perhaps as high as $3 a share by the year 2001. On the basis of $2 in earnings this year, it's selling at a very cheap multiple -- 12 or 13 times. You have a great chance in this one. It was basically a spinoff from the old Dover Corp. years ago. Now it's a beaten-down stock that I think has value.