Overall market is high, but I think a stock like this is at fair value or even a bit undervalued. It's garbage stocks like Facebook that have nosebleed valuations that skew the overall market to look toppy even though there are still a number of value stocks out there.
Yahoo shows their enterprise value in the low 300s but I believe if you back out all their cash it is more like 280 mil. With gross profits of about 380 mil, this company sells at an EV/GP ratio of about 1.5. OK, probabaly 1.6-1.7 if I was more meticulous in my math.
The great tech bargains of 2002 were selling at EV/GP ratios of 1-2. A lot of them had 1000% gains over the next couple of years. I don't expect that this time around, but I do believe the low EV/GP tech stocks today have potential to double or triple. So long as their businesses do well. I don't have a good handle on how strong CALX is from a business competition standpoint, but I figure as cheap as their stock is it's a decent gamble.
Another company that has really low EV/GP but I don't have a good handle on their business prospects is EXFO. If their business does well, their stock will eventually skyrocket.
The intro remarks in conf call by the head honcho. Just a very simple explanation of a very methodical and rational approach toward business success.
And it's not empty rhetoric, this company has delivered on its promises.
Probably buy some tomorrow. Will help me diversify, nearly all my stocks right now are in the semi fabrication eqt biz, simply because that is where the bargains are right now.
However, for a company like Intel which probably is running pretty normal profit levels, EV/Earnings is probably a perfectly good metric. (and in the case of Intel, EV and market cap are almost identical, so PE ratio amounts to the same thing. I like techs with EV/E ratios, whether current or projected, of about 10 or less. Intel, at 13 or so, is a bit higher. However, its size and proprietary technology would seem to justify a bit higher PE and still be able to call it a value stock.
I must say though, Intel at a PE of 13 looks to me a lot more attractive than Intel in the golden era when it was what, PE of 100 or so, like a lot of tech high fliers. A colleague of mine once said all he did was invest all his money in Intel, because it kept doubling over and over. I imagine there came a day when he found the strategy no longer worked.
But right now it seems like a decent value to me. As a business metric, I usually go by enterprise value to gross profits ratio. It's similar to PE but using EV gives a company credit for a strong balance sheet or debit for a weak one. And I look at gross profits as a gauge of "profit potential", since when I was doing a lot of tech investing around 2002, many companies were not profitable, but I figured gross profits would be a metric that would track with the profits the company could be expected to make if the economy improved and the company ran its business competently.
Intel has about EV/GP ratio of 4, which seems pretty reasonable. My existing tech stocks have ratios around 3-4 for the most part. When those ratios are 1-2 the it seems to me those tech stocks are super bargains, and indeed there were quite a few techs at those levels a few years ago, and they indeed had a nice runup. I believe that was around the 2011 time frame or so. Obviously in 2008-2009 there were all sorts of things on the market at fire sale prices.