To All:
May Smart Money Magazine (Wall Street Journal's answer to Money).
p25-26.
Where to Find the New Tech Winners
....What should you do? We've got two suggestions. First, you could invest in a proven breakthrough product that is just beginning to spawn a new growth industry. Second, take advantage of the turmoil to pick up proven growth stocks cheap.
Breakthroughs, of course, can be a sucker's bet if they depend on products that aren't even off the drawing board. Not HDTV. It has real products that will deliver sharper television pictures starting in 1999, and its growth is written into law. Federal regulators have decreed that 53 percent of households must be within range of HDTV broadcasts by then, and in 2006, conventional TV signals will be turned off.
This should spur demand for various semiconductor chips that handle video and graphics functions. In particular, industry experts expect a booming demand for chips that can encode and decode massive amounts of video data so it can be transmitted more efficiently. Several companies make decoder chips, but only one, C-Cube Microsystems of Milpitas, Calif., has an encoder chip for broadcasting on the market. Already a central player, about 45 percent of its $320 million in sales comes from video communications technology.
You'd think a cutting-edge firm like C-Cube would trade at a multiple to match its expected earnings growth of 31 percent per year. Instead, the stock has a PE of 14 times this year's earnings and 11 times 1998 profits.
THE ARTICLE THEN ALSO TALKS ABOUT COMPAQ AS THE OTHER PRIME TECH STOCK TO BUY NOW.
GR
A little good news in the media does not hurt. |
