"buy tech and buy the semis, too"
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Chips Get Closer to Becoming Buys
By Cody Willard
RealMoney.com Contributor
1/19/2007 9:31 AM EST
During earnings season, it seems like the days just disappear before they even start. There's so many conference calls to listen to and transcripts to read. Analyses and summaries of analyses fill the inbox all day long. It's a lot of work, but if you have any fundamental bent at all, you have to tune in and get some data points.
Did you see the semis trading down more than 3% today? I've repeatedly suggested avoiding the semis until the Street is fully aware of and baking in the problems associated with the industry's inventory glut. Isn't it ironic but typical that such recognition happens just as the glut seems to be working itself out?
Opportunity is coming in the chips, and I'm getting excited about putting some money to work in longer-dated, slightly out-of-the-money calls in that sector. Two names I'm looking at are Seagate (STX - commentary - Cramer's Take - Rating) and Micron (MU - commentary - Cramer's Take - Rating).
IBM -- like Cisco (CSCO - commentary - Cramer's Take - Rating), Apple (AAPL - commentary - Cramer's Take - Rating) and Microsoft (MSFT - commentary - Cramer's Take - Rating) -- can actually benefit from the inventory glut in its supply chain, as prices for components come down. I'd rather be long IBM than Cree or Xilinx into tonight's call, but I'm not going to play any of them as the risk/reward isn't favorable for me.
Since September, when the Nasdaq was much lower and the semis a good bit higher, I've been saying buy tech and sell semis.
Though it's not today's business, that saying is slowly but surely changing to "buy tech and buy the semis, too."
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