Best of the Week
Most Popular
1.Gold Price Target of USD 2,300 - GoldCore
2.Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - Nadeem_Walayat
3.Why British Muslims Are Leaving Elysium Paradise for Syrian Hell - Nadeem_Walayat
4.Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - Nadeem_Walayat
5.Extreme Gold/Silver Shorting - Zeal_LLC
6.European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - Nadeem_Walayat
7.Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - Michael_Noonan
8.Gold and Silver Price Headed for Breakdown - Jordan_Roy_Byrne
9.Greece Crisis OXI - Raul_I_Meijer
10.Flatline Investing and Dead End Debt Schemes - Doug_Wakefield
Last 5 days
The U.S. Dollar's 2014-2015 Rally: Wave 3 in Action - 3rd July 15
Stock Market Where are we? And where are we Going? - 3rd July 15
Xi’s Anti-Corruption Campaign Is Key to China’s Prospects - 3rd July 15
How the New Iranian Nuclear Deal Will Impact Crude Oil - 3rd July 15
China's Stock Market Rollercoaster Ride Continues - 3rd July 15
Gold Stocks Cheap to Buy but Not for Long - 3rd July 15
Capital Controls and a Bank Holiday in Greece… Here’s How You Can Profit - 3rd July 15
Greece's Varoufakis: I will Resign if there's a 'Yes' Vote - 2nd July 15
The Student Loan Bubble: Gambling with America’s Future - 2nd July 15
Inflation Is Lurking, but This Asset Can Protect You - 2nd July 15
Three Total Wealth Stock Investor Tactics You’ll Need Because Greece Isn’t Over - 2nd July 15
Why This $5.6 Trillion Investor Profit Boom Is Set To Take Off - 2nd July 15
Greek Debt Crisis: "Too late to prepare now" - Video - 2nd July 15
Guaranteed US Dollar Death Dynamics - 2nd July 15
The Greek Stress Test & The Reality Of Incremental Changes - 2nd July 15
Forget Drachmas Greece Syriza Government Could Instruct Central Bank to Print Euros! - 2nd July 15
Greece Debt Crisis Trigger for Stock Market Crash or Bull Rally? Video - 1st July 15
Gold Stocks Break Below 2008 Low - 1st July 15
SPX Stock Market Retracement May be Over - 1st July 15
Silver Tunnel Vision 'Experts' - 1st July 15
Gold And Silver - Monthly, Quarterly Ending Analysis - 1st July 15
Europe’s Controlled Demolition - 1st July 15
The End of Dow 18,000; Bailouts No Longer Extended  - 1st July 15
Athens Mayor: Greek Government Should Resign - 1st July 15
China Stocks - This Is What a Bubble Looks Like - 30th June 15
Stocks Plunge on Greece Euro-Zone Financial Armageddon Blackmail - 30th June 15
Greece Crisis Shows Importance of Gold as Europeans Buy Coins and Bars - 30th June 15
Stock Investors Express Route to Profits in the Healthcare Sector - 30th June 15
Beyond the Greek Impasse - 30th June 15
Gold GDXJ : Impulse Move Pending - 30th June 15
Fed Interest Rate Increase Could Be Best Thing to Happen to Gold - 30th June 15
Marc Faber - Greece is Basically Bankrupt - 30th June 15
Greece - Shoot the Dog and Sell the Farm - 29th June 15
Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy - 29th June 15
The New "Sharing Economy" May Not Be the Profit Bonanza Everyone's Expecting - 29th June 15
Gold and Silver Greece and Short Positions - 29th June 15
Volatility and Sleep-Walking Markets - 29th June 15
Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - 29th June 15
Stock Market More Decline Ahead? - 29th June 15
China Stock Market Crackup - The Final Trap Looms... - 29th June 15
Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - 28th June 15
Investor Stock Play for Two Growing Missile Threats - 28th June 15
Stock Market Uptrend/downtrend Inflection Point - 27th June 15
Greece Crisis OXI - 27th June 15
Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - 27th June 15
It’s Time to Change the Way You Look at Disney Forever - 27th June 15
Flatline Investing and Dead End Debt Schemes - 27th June 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

China Stocks - Where are they going?

One of the Few Great Bargains Left in the Stock Market

Companies / Tech Stocks Mar 01, 2013 - 03:13 PM GMT

By: GrowthStockWire

Companies

Frank Curzio writes: Just about every sector has been plucked from the market's bargain bin...

Take airlines... In late 2011, the sector was in the trash heap. Concerns over the global economy helped hammer airline stocks. Nobody wanted to own them. Since then, sentiment has improved, and the sector is up about 40%.


We can say the same for bank stocks... or transportation stocks... or homebuilding stocks. A few years ago, things looked like they couldn't get any worse for these sectors. Share prices were badly beaten-down. Sentiment was terrible. But investors who stepped in amidst the pessimism made huge returns.

It's great to make big returns in such a short time. But these big rallies make it tough to find low-risk, high-reward trades in cheap, beaten-down sectors. One sector, however, is still on sale... And it's still ripe with cheap, low-risk stocks that offer huge upside.

Semiconductor ("chip") stocks have been some of the worst performers over the past two years. These companies make the chips that go into computers, smartphones, video-game consoles, and other electronic devices.

As the chart below shows, semiconductor stocks have underperformed the market by more than 30 percentage points over the past two years. Take a look...


Chip stocks have been hammered. But as we've seen with airlines, homebuilders, and banks... buying beaten-down stocks in a sector just before it "booms" could result in massive short-term gains.

We have this type of low-risk, high-reward opportunity today. Let me explain...

The semiconductor sector regularly goes through huge "booms" and "busts." It enjoyed a huge boom in late 2010/early 2011, but it suffered a massive bust by the end of the year.

What happened?

First, investors were worried about the slowdown developing in PC sales – a trend that continues today.

You see, instead of buying traditional desktops and laptops, consumers are buying tablets, like Apple's iPad and Microsoft's Surface. Many chip companies have transitioned their product lines to keep up with growth in the tablet market (which I expect to grow north of 35% this year). But PC makers haven't been able to keep up. As a result, most chip companies were stuck with inflated inventory levels.

Second, investors have been worried about global economic growth sputtering. Many people were terrified things would get worse. So they dumped chip stocks... especially the sector's smaller players.

But take a look at the right-hand side of the chart above. You'll notice the semiconductor stocks have shown positive price action over the past few months. The sector has stabilized...

Today, chip companies are well-positioned to lead the smartphone boom, another high-growth market. And inventory levels are leaner than ever. According to investment firm Goldman Sachs, inventory for chip companies is down 17%. Plus, Goldman sees a huge jump in demand this year and beyond as China rebounds.

There's also a massive spending spree taking place in the telecom space – one of chip stocks' biggest customers.

For example, AT&T expects to spend $22 billion next year upgrading its network, including $8 billion on its wireless division. Sprint and Verizon will also spend billions on upgrades. We can expect the same from Brazilian carriers. They want to upgrade their wireless capabilities ahead of the 2014 World Cup and 2016 Summer Olympics. Finally, Chinese carriers will also spend billions as the country's smartphone market explodes.

Lean supply coupled with stronger demand this year suggests a cyclical recovery is near. The semiconductor sector is already up 25% since bottoming in late 2012... and the rebound is just getting started.

Plus, chip stocks are cheap. Semiconductor giant Intel (NASDAQ: INTC) trades at just 10 times earnings. And Cypress Semiconductor (NASDAQ: CY) – the "Intel" of small stocks – trades at 12 times earnings. The overall market is trading for around 18 times earnings.

Many chip stocks also pay 3% or more in dividends. With Treasurys, CDs, and savings accounts paying next-to-nothing in interest, a 3% dividend is huge.

In sum, chip stocks have a big picture tailwind working in their favor. Many have been abandoned and "left for dead." Yet, the sector has huge upside potential. That's why I recommend taking a position today.

Good investing,

Frank Curzio

P.S. If you'd like to take advantage of our safe, high-yield semiconductor recommendations, you can come onboard with a 100% risk-free trial to the Small Stock Specialist. If you decide the research isn't for you, we're happy to refund all your money. Click here to learn how to come onboard.

http://www.growthstockwire.com

The Growth Stock Wire is a free daily e-letter that provides readers with a pre-market briefing on the most profitable opportunities in the global stock, currency, and commodity markets. Written by veteran trader Jeff Clark, and featuring expert guest commentaries, Growth Stock Wire is delivered to your inbox each weekday morning before the markets open.

Customer Service: 1-888-261-2693 – Copyright 2009 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Growth Stock Wire Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History