Valuing the SOX: Advanced Micro Devices

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Editor's note: This is the fourth installment of a multipart series on semiconductor stocks. Please check out Part 1, Part 2 and Part 3!

When we think about cheap, and low-risk, Advanced Micro (AMD Quote) always comes up. Its multiple is perennially low because it's a perennial loser in a battle with Intel(INTC Quote).

Except for the last year. In the last year AMD has done so much right and Intel has done so much wrong that I have to say AMD looks darn attractive to me.

P/E Data Ranked Over Time
Advanced Micro Devices (AMD)
	RANK	DATE	P/E	****
Lowest P/E	1	10/7/94	8.07
	2	3/14/01	10.19	YESTERDAY
	3	3/8/96	10.80
	4	7/19/96	38.36
	5	1/9/98	n/a
	6	6/13/97	n/a
Highest P/E	7	10/9/98	n/a
	8	2/26/99	n/a
The list is sorted from the lowest P/E to the highest, with yesterday's P/E highlighted

Here's the problem, though. Intel has seen the abyss and it wants out. I think the window where AMD could prosper is about to close again. Intel has the ability to price its P3 through the floor once the P4 scales correctly and the yields go up. That's the worst time to be long AMD. So, while I am inclined to think that this is one cheap stock, as the statistics show, it's going to stay cheap. That's not why we buy stocks.

Pass.

Ideal Entry and Exits on the SOX Index Overlayed on AMD's P/E and Price

Source: Bloomberg

SOX Index					Advanced Micro Devices (AMD)
	Date		Index		Price	P/E Ratio	Price to Sales
Currently, this is where we are this week. On	3/14/01	the SOX is at	609.16	and Advanced Micro Devices is at:	$23.94	10.19	1.62
A great Exit on the weekly SOX chart would have been	3/10/00	when the Index was at	1332.73	At the time, Advanced Micro Devices was at:	26.00	#N/A History	2.68
A great Entry on the weekly SOX chart would have been	2/26/99	when the Index was at	356.26	At the time, Advanced Micro Devices was at:	8.94	#N/A History	1.01
A great Exit on the weekly SOX chart would have been	1/29/99	when the Index was at	420.45	At the time, Advanced Micro Devices was at:	11.47	#N/A History	1.30
A great Entry on the weekly SOX chart would have been	10/9/98	when the Index was at	200.8	At the time, Advanced Micro Devices was at:	7.59	#N/A History	0.92
A great Exit on the weekly SOX chart would have been	2/27/98	when the Index was at	316.43	At the time, Advanced Micro Devices was at:	11.75	#N/A History	1.40
A great Entry on the weekly SOX chart would have been	1/9/98	when the Index was at	248.9	At the time, Advanced Micro Devices was at:	9.13	#N/A History	1.09
A great Exit on the weekly SOX chart would have been	8/22/97	when the Index was at	391.62	At the time, Advanced Micro Devices was at:	20.91	#N/A History	2.75
A great Entry on the weekly SOX chart would have been	6/13/97	when the Index was at	294.86	At the time, Advanced Micro Devices was at:	18.44	#N/A History	2.57
A great Exit on the weekly SOX chart would have been	1/31/97	when the Index was at	288.73	At the time, Advanced Micro Devices was at:	17.56	#N/A History	2.43
A great Entry on the weekly SOX chart would have been	7/19/96	when the Index was at	152.71	At the time, Advanced Micro Devices was at:	5.56	38.36	0.69
A great Exit on the weekly SOX chart would have been	5/17/96	when the Index was at	212.57	At the time, Advanced Micro Devices was at:	9.69	17.00	1.11
A great Entry on the weekly SOX chart would have been	3/8/96	when the Index was at	172.71	At the time, Advanced Micro Devices was at:	8.75	10.80	0.96
A great Exit on the weekly SOX chart would have been	8/18/95	when the Index was at	293.79	At the time, Advanced Micro Devices was at:	17.56	14.05	1.70
A great Entry on the weekly SOX chart would have been	10/7/94	when the Index was at	122.72	At the time, Advanced Micro Devices was at:	12.31	8.07	1.19
*The determination of these dates and prices was made by identifying optimum entry and exit points on an historical graph of the SOX using weekly closing prices.