The SOX yesterday made a huge rally, so there were many semiconductor related stocks coming up on my technical filter.
I understand that semiconductors are something to make electronic machines work, but I have to be honest, I don't know what the hell a semiconductor is, or why it is so expensive, since these companies have a lot of revenues.
Anyway, ASTSF (hard ticker, usually that's a good thing ;D) tests semiconductors products:
«ASE Test Limited is the world's largest independent provider of semiconductor testing services. ASE Test Limited provides customers with a complete range of semiconductor testing services, including front-end engineering testing, wafer probing, final production testing of packaged semiconductors and other test-related services. ASE Test Limited has been quoted on Nasdaq since 1996 under the symbol "ASTSF".»
Usually, I like to annualize the latest quarterly results to come up with an earnings multiple. Of course, a quarter isn't the same thing as a full year, but I do it anyway. Over the 4th quarter the company earned $0.26 a share, so the earnings multiple, according to my method, is $8.96/$1.04 = 8.61.
But, if we don't want to trust this method (there are reasons not to believe it, since the company expects lower revenues and profits for the 1st quarter of 2006), we can pick analysts estimates:
Analysts, on average, expect 2006 EPS of $0.89 and 2007 EPS of $1.17. If we take into consideration 2006 estimates, the forward earnings multiple is 10, and if we consider 2007 estimates, the forward P/E is 7.7.
This looks cheap to me.
I also find interesting that, although the company offered lower guidance for the following quarter, the stock has been rising, and yesterday it made a bullish breakout.
This is a semiconductor related stock with a technical bullish trend and cheap valuation. It's the kind of stock that I want, so I'll buy it around today's open for the Stocks on Fire Portfolio.
Quote from: David Randolph on March 02, 2006, 05:32:58 AM
I understand that semiconductors are something to make electronic machines work, but I have to be honest, I don't know what the hell a semiconductor is, or why it is so expensive, since these companies have a lot of revenues.
LOL, I spent about 15 years in the semiconductor industry, it is a complex environment for sure.
SemiconductorA class of materials, such as silicon and germanium, whose electrical properties lie between those of conductors (such as copper and aluminum) and insulators (such as glass and rubber). A semiconductor substance can conduct electricity under some conditions but not others, making it a good medium for the control of electrical current. Its conductance varies depending on the current or voltage applied to a control electrode, or on the intensity of irradiation by infrared, visible light, ultraviolet, or X rays. The term is also used to denote electronic devices made from semiconductor materials.
Semiconductor DeviceAn electronic device whose essential characteristics are governed by the flow of charge carriers within a semiconductor.
Well, this probably hasn't helped any ;)
It did Aussie, it did, finally I know what a semiconductor is and it makes perfect sense. Thanks :)
ASTSF is a very cheap semiconductor related stock. This is why it jumped 9.5% while the SOX itself went down 1.3%.
I'll continue holding ASTSF.
ASTSF just reported monthly sales:
ASE Test Limited Announces February 2006 Revenues (http://biz.yahoo.com/prnews/060309/hkth003.html?.v=27)
Remember I wrote this on my initial recommendation:
QuoteAnalysts, on average, expect 2006 EPS of $0.89 and 2007 EPS of $1.17. If we take into consideration 2006 estimates, the forward earnings multiple is 10, and if we consider 2007 estimates, the forward P/E is 7.7.
Now the company is surpassing those same analysts estimates, look at this:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=16967;image)
On average, analysts are expecting revenues for the 1st quarter to come in at $118.38M. But the company already reported monthly sales for January of $40.076M and for February of $40.348M. If March comes on average, the company will report revenues for the first quarter of $120.636M.
More importantly, revenues are growing, the earnings multiple is low and the stock price has an ascending trend.
I'll continue holding ASTSF.
ASTSF - doing just fine 8) The purpose of this update is to make sure we have a stop in place since a clear one is presented to us. That is just beneath 1. long term resistance that has now become support 2. the ascending trendline 3. the local low(recent area of support)
We will hold ASTSF with a stop @ 8.62.
We sold ASTSF according to plan @ 8.60