This is from Briefing.com: It is encouraging that they think the near term profit potential for QNTM is 19%-25%.
Ten Trading Buys in Tech Sector
Daily commentary updated for November 4, 1997
In this volatile market, stocks are trading less on fundamentals and more on psychology.
Nowhere is this more true than in the topsy-turvy technology sector. While Briefing
contends that the intermediate-term outlook for the sector remains clouded by the
currency crisis overseas and by the historically high valuation levels exhibited by many of
its leadership stocks, we acknowledge that the sector is oversold from a short-term
perspective. Given the scope of the recent declines, normal corrective activity could result
in rather sizable near-term gains for a number of stocks. In today's Brief we focus on 10
such issues. It should be noted, however, that inclusion in this list is not an endorsement of
the company's long-term fundamental outlook. These are, as the title of today's Brief
implies, buy candidates for highly aggressive, risk-tolerant, short-term traders looking to
exploit the oversold condition of the sector. One factor they all have in common is that
they are large-cap stocks. Until events overseas settle down we expect institutional money
to favor the liquidity of the large caps, and thus we confined our search to that universe.
Briefing's Top Ten
1.Andrew Corp. (ANDW 24 1/2): Supplier of communications systems equipment
and services... Stock moved to low end of 5-month trading range during sell-off...
On improved industry tone, look for return to upper boundary of range near 28...
Near-term profit potential 14%... Chart
2.Applied Materials (AMAT 36 1/16): Supplies wafer fabrication systems and
services to the global chip industry... Fell nearly 44% from recent highs in
overreaction to currency crisis... Stock has bounced nicely off key support at 30...
Near-term resistances at 40 3/8 and 43 3/4... Profit potential 12%-21%... Chart
3.Compaq Computer (CPQ 67 1/8): Leading designer, developer, manufacturer
and marketer of PCs for professional and consumer users... Found support near
60, as stock held up reasonably well during retreat... Momentum favorite well
positioned to ride short-term bullish wave back to 75... Profit potential 11.7%...
Chart
4.Dell Computer (DELL 83 1/4): Designs, develops, manufactures, markets,
services and supports a variety of computer systems including desktops, notebooks
and network servers... Hit pretty hard during market retreat amid valuation
concerns... But stock still way up for the year and this favorite of momentum
investors should attract plenty of buying interest among s/t speculators... A test of
resistance at 92, equals profit potential of 10.5%... Chart
5.Intel Corp. (INTC 78 1/2): World's leading designer, manufacturer and seller of
microcomputer components... Another institutional favorite which took a pounding
amid anxiety over overseas events... But key support at 70 held up nicely...
Improved market tone leaves stock poised for test of gap resistance at 90... Profit
potential 14.6%... Chart
6.Kulicke & Soffa (KLIC 26 5/8): Designs, makes and markets wire bonders,
wafer saws, die bonders, micro tools and resistivity probes used in production of
semiconductor devices... Down more than 50% during sell-off, stock has plenty of
room to run during corrective bounce... Initial resistance at 30, but note gaps at 35
7/8 and 45 3/4... Near-term profit-potential of 12.7%... Chart
7.Novellus Systems (NVLS 46 3/4): Designs, makes and sells Chemical Vapor
Deposition (CVD) wafer process equipment used in the manufacture of integrated
circuits... Third entrant from the chip equipment industry, also saw its stock priced
marked down sharply by concerns over events in SE Asia... But support in the
42-40 range held... Move back to the 53-55 area would represent little more than a
50% retracement of October decline... Should also be noted that company has
minimal exposure to SE Asian region... Profit potential 13%-18%... Chart
8.Quantum Corp. (QNTM 33 11/16): Designs, develops and markets information
storage products including hard disk drives... Weak tone in the group and the
market weighed on stock despite its solid earnings growth and discounted values...
Not surprisingly, stock found good support at 30... Look for return to upper end of
3-mo trading range marked by 40-42... Profit potential 19%-25%... Chart
9.Sun Microsystems (SUNW 36 5/8): Provides hardware, software and services
for establishing enterprise-wide intranets and expanding the power of the Internet...
Poor market tone and disappointing earnings report combined to send this group
leader down nearly 36% off its recent highs... Bargain hunters likely to propel stock
up to near-term resistance in the 41 area... Profit potential 12%... Chart
10.Texas Instruments (TXN 115 1/8): Global semiconductor company... Dropped
nearly 40 points from its mid-October high, but rallied off support in the 100 area
on two occasions... Corrective rebound to the 127-130 range very doable... Profit
potential 10%-13%... Chart
Valuation Snapshot
Though we selected the above stocks based on their technical characteristics, the table
below provides a snapshot of the group's valuations.
Stocks:
Price/earnings
Relative p/e
PEG
ANDW
17.9
0.85
0.81
AMAT
17.0
0.81
0.75
CPQ
20.3
0.96
1.02
DELL
33.3
1.59
1.15
INTC
17.4
0.83
0.83
KLIC
11.4
0.54
0.61
NVLS
15.6
0.74
0.66
QNTM
12.7
0.60
0.65
SUNW
16.3
0.78
0.87
TXN
19.7
0.94
1.04
All figures in the table are based on estimated FY98 earnings... The S&P 500 was used as
the relative benchmark... PEG is derived by taking the company's p/e ratio and dividing it
by the company's projected long-term growth rate.
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