Turn the page, the bears are approaching.
Don't buy into the romanticized. While it's true that chips continue to grow in relevance, that will never free Applied from its cyclical shackles. I already covered the 1996 debacle. Let me point out that in 1998 revenues fell and earnings were actually cut in half. That is why last year's numbers are so misleading. Or, worse, is this a company that's going to go odd every even-numbered year? What year is this again?
Applied has enough positive momentum to carry it through the next few months. Easily. But what next? The other bowl of porridge?
I'm not a fan of market timing. Growth companies just shouldn't be played that way. However, Applied has a two-faced trading history begging for guidance on buy entry points. If you go long on Applied right now, will you be wealthier in 10 or 20 years? Even my bearish ways won't deny that. But if this is 1995 revisited, and holding off a year means your returns will be tripled no matter how long your horizon, the opportunity cost of buying into today's euphoria is huge.
My worthy Fool pointed out some juicy metrics, but, again, it's all cyclical. Last year, operating margins came in at 19.2%, but the year before they were only 9.6%. So while I can't argue with Justin's snapshot of today, it is as true a picture of the future as it was of the past.
The quality of the company is top-notch. The quality of the stock -- in an industry where whiplash comes with the cyclical territory -- is suspect.
This Week's Duel
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