The following analysis is an excerpt from LLOYD BARCLAY's website

Sanmina (SANM) is a value stock with a record of healthy growth. It has good contrarian characteristics. And it has established technical support.

At $3.93, Sanmina (SANM) is a growth stock at a value price.

Value:

current price/book = 0.88
current price/sales = 0.18
forward price/earnings = 10.1

Growth

This is how Sanmina has grown in the last 6 years. Since the year 2000, SANM has increased revenues from $4.2 billion to $11.7 billion. A reasonable debt/equity ratio of 0.68 shows that it has remained profitable while growing.

Contrarian

Also since 2000, its share price has dropped from $53 to as low as $3.45. The price returning to the average of these 2 extremes would increase the price to about $28.50.

Contrarian + Value

SANM has revenues/share of $21.73. At $28.50, it would have a reasonable price/sales ratio of 1.2. At $32.60, it would still have a price/sales ratio of only 1.5. At any rate, $30 seems to be a reasonable price for the stock. It might take 5 or 10 years to get to $30, but that's still an excellent rate of return for patient investors. And strong support at $3.50 is a good technical indicator to show that SANM has bottomed and is likely to get good support in the coming months. With support established, it's likely to attract more value and contrarian investors who, up until now, have been hesitant to catch this "falling knife."

¶ 11:38 PM

Post a Comment