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Subject: Mark Robertson's Pick: LLTC

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Joe Craig
Ellicott City, MD
StockCentral Administrator

01/04/2007 11:38 AM
Mark says: My first selection is a company that I’ve not only invested in but featured many times, Linear Technology. I believe it was Ralph Seger who first made me aware of the company – as well as EMC Corp and a couple of other late-1990s leaders. I’ve attached a copy of a fairly recent and still relevant report that we provide to our subscribers at www.manifestinvesting.com I’ve also attached a current SSG data file (SSG and ITK formats) for those who want to take a closer look.
Attachment: LLTC-20050429.pdf Attachment: LLTC.ITK Attachment: LLTC.SSG
Joe

Stephen Johnson

01/04/2007 4:39 PM
I've been tracking LLTC on my watch list for a couple of months now, but can't justify a high P/E ratio of 30 for a company growing at <15%. What is your rationale for the high P/E? My SSG has a projected high P/E of 23, or slightly higher than current.

Mark Robertson
Rochester Hills, Michigan
www.manifestinvesting.com

01/05/2007 10:02 AM
Great question, Steve. Thanks for asking. This is something that many people wonder about and struggle with. My personal opinion is that many NAIC investors are too strict with their upper limits for some companies. When the High P/E forecast is unduly constrained, the average P/E used for the PAR calculation is reduced beyond what it probably should be. In the case of LLTC, we're dealing with an industry leader with an analyst consensus EPS growth forecast of 20% (Yes, we know that's statistically high) but even so -- it's a really healthy growth rate. The Specialized Semiconductor industry is growing at 18% (EPS) with an industry median P/E of 25x -- so I'm pretty comfortable with a high P/E of 30x and a low of 20x in this case. I recently finished a workshop (we call them Continuous Classrooms) at www.manifestinvesting.com If you want more on the subject, because the question and answer came up there also, see: http://www.manifestinvesting.com/auth/boards/topic_show.pl?tid=847 Note: The site is subscription based ($79/year for StockCentral members) but we offer a wide-open fully functional 30-day trial for anyone who would like to explore the workshop and the rest of the site features. Best wishes and Better Investing, Mark Robertson Founder, www.manifestinvesting.com

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