Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: chaz who wrote (28925)	3/8/1999 12:11:00 PM
From: Sun Tzu	Read Replies (2) \| Respond to of 70976

>> Wow, I would hate to be paying your asprin bills. Huh? I don't have anymore headaches than anyone else in the market. I position trade what I am comfortable with and set expectations. When things don't go my way, I reverse course (95% of times) rather than fight the tape (long or short). This is the traders' edge. BTW, I don't day trade. On average I hold a position between two months to two years. It has worked fine for me so far and I see no reason to change it. Now let's get back to the AMAT topic. Since nobody here seems to want to do fundamental analysis on AMAT, I spent 15 minutes over the weekend to do so, even though I have no position in it. Here are the records I have for AMAT over the past 10 years. Price is the average price during the year, FPSR was achieved by dividing each year's market cap by next year's sales. You notice that it is a lot more stable than BPSR which is the backward price to sales ratio, indicating that the market can price the forward earnings fairly most of the times. Note that since these numbers were always delayed by a few months, you could argue that the FPSR should represent two years' ahead estimates (i.e AMAT is now trading based on 2000 estimates and not 99 estimates, even though we are at the begining of '99). I don't like to discount cyclicals too far into the future, but I won't argue the approach here. Also note that the market has been trading dramatically above historical norms in the past 3 years. In my estimates for the "fair price" of AMAT, I assumed that the market will continue to get even more overpriced as it is now (this is euphemized sometimes by the industry as "multiple expansion"). Verify it for yourself and do yourown DD. To me it says that AMAT is running on hope for the moment; it is priced to see the unprecedented growth over the next two years, even at the present prices. enjoy, Sun Tzu Ticker AMAT AMAT AMAT Item Price Sales Shares Mcap B-PSR F-PSR SalesGro FF-PSR 12/31/88 1.23 174 226 278 0.767 2.080 0.554 12/31/89 1.57 363 264 414 2.375 0.825 1.383 0.730 12/31/90 1.57 502 268 421 1.160 0.742 1.130 0.659 12/31/91 1.78 567 273 485 0.967 0.760 1.126 0.646 12/31/92 1.72 639 276 475 0.837 0.632 1.177 0.440 12/31/93 2.58 751 290 748 1.171 0.692 1.437 0.450 12/31/94 6.21 1,080 329 2,044 2.721 1.232 1.537 0.668 12/31/95 10.9 1,660 340 3,707 3.432 1.211 1.845 0.894 12/31/96 17.65 3,062 355 6,260 3.772 1.510 1.354 1.537 12/31/97 17.28 4,145 367 6,345 2.072 1.558 0.983 12/31/98 31.87 4,074 378 12,042 2.905 Min 1.23 174 226 278 0.837 0.632 0.983 0.440 Max 31.87 4,145 378 12,042 3.772 1.558 2.080 1.537 Mean 8.58 1,547 306 3,020 2.141 0.993 1.405 0.731 Med 2.58 751 290 748 2.224 0.796 1.369 0.659 GeoMean 4.51 980 302 1,364 1.881 0.942 1.370 0.681 GrowthR 1.38 1.37 1.05 1.46 1.02 1.07 1.11 Best Case Scenario to justify current price, 1999 (2000?) sales = $13,159 This implies YoY sales growth rate of 3.23 Alternatively, 2000 (2001?) sales must = $22,215