Investor Alert -- Chip Stocks
The report and earnings from AMAT were little short of stunning. By any and every metric, they exceeded analysts estimates. Their management is conservative and, to a person, they said that their largest problem was trying to keep up with demand, so much so that they are ramping up additional production facilities.
I consider this report the most important in the chip sector because unlike Intel, they span the entire range of chip production, rather than being primarily PC-oriented. They certainly cast doubt on Jonathan Joseph's (SSB) analyst report stating that we had reached the peak of current chip cycle.
Having said all this, chip stocks are STILL down 30-75% from YTD-highs and are extraordinary bargains. I think the next two weeks will give us one of the best time frames for adding onto or initiating positions in this sector. Rather than extreme boTtom-fishing in the small-caps, I'd advise sticking with quality. There are many top-tier names that present great value. Some suggestions:
chip-stocks: ADI, TXN, ATML, IDTI, ALTR, XLNX
chip-makers: AMAT, NVLS,
small-cap: AMKR, KOPN
I'd avoid ANAD (weak RS all year long) and LSI (poor top-line revenue growth over last two quarters). Although the creme-de-la-creme are AMCC, BRCM, and PMCS, they are already priced for perfection; unless they drop off dramatically, I wouldn't chase them.
IMO, when techs return to favor later in the year, this sector will outperform. Comments always welcome, of course. |
