I agree with him 100%. The time has come:
SAN FRANCISCO (MarketWatch)
Oakmark fund manager Bill Nygren expects fallen growth stocks to rise...
...Similarly, Intel stock peaked in 2000 at $76 a share on a $5 a share sales base. Even adjusting for the cash back then, it was about 15 times sales. Intel's product is more propriety than Dell's, so they deserve to sell at a higher price to sales, but 15 times is a number we find kind of ridiculous. Today you're paying about a market multiple on earnings, and not much more than the market multiple on sales, for a very strong balance sheet and a company that's repurchasing shares.
It's easy to forecast that semiconductor sales are going to grow more rapidly than the economy. It's also easy to project that five years from now Intel will be the leader in semiconductor sales. If it turns out that Intel is just an average company, then the price we're paying is appropriate. For it to be a bad investment, you'd have to argue that it's a worse than average company. The chance that five years from now we're talking about Intel as a superior company is a much higher probability.
SAN FRANCISCO (MarketWatch)
Oakmark fund manager Bill Nygren expects fallen growth stocks to rise...
...Similarly, Intel stock peaked in 2000 at $76 a share on a $5 a share sales base. Even adjusting for the cash back then, it was about 15 times sales. Intel's product is more propriety than Dell's, so they deserve to sell at a higher price to sales, but 15 times is a number we find kind of ridiculous. Today you're paying about a market multiple on earnings, and not much more than the market multiple on sales, for a very strong balance sheet and a company that's repurchasing shares.
It's easy to forecast that semiconductor sales are going to grow more rapidly than the economy. It's also easy to project that five years from now Intel will be the leader in semiconductor sales. If it turns out that Intel is just an average company, then the price we're paying is appropriate. For it to be a bad investment, you'd have to argue that it's a worse than average company. The chance that five years from now we're talking about Intel as a superior company is a much higher probability.
This entry was posted
on Monday, July 10, 2006 at 10:28 PM.
