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Commentary: Wrong! Tactics and Strategies
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Valuing the SOX: Advanced Micro Devices
By James J. Cramer

3/15/01 12:06 PM ET


Read More
Click here for the latest from James J. Cramer.
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:NYSE - news - boards) always comes up. Its multiple is perennially low because it's a perennial loser in a battle with Intel (INTC:Nasdaq - news - boards).

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.


James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to jjcletters@thestreet.com.
Send letters to the editor to letters@realmoney.com.
Read our conflicts and disclosure policy.
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Dow Jones S&P 500 NASDAQ 10-Year Note
10,289.67 1,089.73 2,167.33 34.03
Oil *
73.44
UP
3.70
DOWN
2.20
DOWN
5.66
UP
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10 Yr
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111.36
+0.04%
-0.20%
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Data delayed 20 minutes