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Technology Stocks : Semtech (Nasdaq:SMTC) -- Ignore unavailable to you. Want to Upgrade?

To: Si_Detective who wrote (995)	1/20/2000 9:31:00 PM
From: Leeza Rodriguez	Read Replies (2) \| Respond to of 1225

This morning I heard Louis Navallier on Squawkbox and he made a very important point about what type of stocks big money is flowing into. For those of you not familiar with Navallier, he runs a fund that is completely and unemotionally quided by quantitative analysis.Before you throw up (or run)--hear me out... Navallier basically charts stocks prices against a whole slew of financial parameters (margins, earnings, revenue growth, ROE, and on an on.) He also analyzes the results by market caps. The Navallier theory is that each cycle (several years) the analysts 'fixate' on one or two financial parameters. Since the analyst community is a relatively small/incestuous community they usually tend to get fixated on the same themes for a period of time. As I understand it most themes go on for several years--before they turn to something new and exciting. . His traders buy and sell a universe of stocks that fall within a certain defined area of the 3-d model. Navallier has successfully been using this technique for several decades and his fund has consistently produced some great returns. So-- the Navallier philosphy is to 'correlate' money flow with financial parameters and 'identify' what Wall Street is chasing . In other words--go where the hockey puck is about to go. So-- ideally, he tries to spot inflection points when money starts to chase a new parameter. So---now that you know the background, Navallier stated that the latest and greatest thing is : 1- money flowing from large cap to small and med cap (ok , we all knew that already) 2- money is recently starting to chase anything with EXPANDING operating margins. Navallier explained that this was why the rally has been so narrow, because the universe of stocks with that financial parameter of expanding operating margins is very very small...and if you further define it to expanding margins in the small-med cap stocks, well...it is a VERY exclusive group. Guess what company fits this description perfectly? I think we will continue to see money flow into this company as long as operating margins continue to e-x-p-a-n-d. And remember that SMTC management recently stated they were shooting for 60% gross margins. I think the stock continues to grow as long as these forces are in motion. Leeza Rodriguez