Best of the Week
Most Popular
1.The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - Doug_Wakefieldth
2.Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - Nadeem_Walayat
3.The Trend Every Nation on Earth Is Pouring Money Into - Keith Fitz-Gerald
4.Do Tumbling Buybacks Signal Another Stock Market Crash? - 26Mike_Whitney
5.Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - Nadeem_Walayat
6.Gold And Silver Price - Respect The Trend But Prepare For A Reversal - Michael_Noonan
7.U.S. Economy Faltering Momentum, Debt and Asset Bubbles - Lacy Hunt
8.Bullish Silver Stealth Buying - Zeal_LLC
9.Euro, USD, Gold and Stocks According to Chartology - Rambus_Chartology
10.Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - EWI
Last 5 days
US Mortgages, Risky Bisiness "Easy Money" - 30th Oct 14
Gold, Silver and Currency Wars - 30th Oct 14
How to Recognize a Stock Market “Bear Raid” on Wall Street - 30th Oct 14
U.S. Midterm Elections: Would a Republican Win Be Bullish for the Stock Market? - 30th Oct 14
Stock Market S&P Index MAP Wave Analysis Forecast - 30th Oct 14
Gold Price Declines Once Again As Expected - 30th Oct 14
Depression and the Economy of a Country - 30th Oct 14
Fed Ends QE? Greenspan Says Gold “Measurably” “Higher” In 5 Years - 30th Oct 14
Apocalypse Now Or Nirvana Next Week? - 30th Oct 14
Understanding Gold's Massive Impact on Fed Maneuvering - 30th Oct 14
Europe: Building a Banking Union - 30th Oct 14
The Colder War: How the Global Energy Trade Slipped From America's Grasp - 30th Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VIII) - 29th Oct 14
Flock of Black Swans Points to Imminent Stock Market Crash - 29th Oct 14
Bank of America's Mortgage Headaches - 29th Oct 14
Risk Management - Why I Run “Ultimate Trailing Stops” on All My Investments - 29th Oct 14
As the Eurozone Economy Stalls, China Cuts the Red Tape - 29th Oct 14
Stock Market Bubble Goes Pop - 29th Oct 14
Gold's Obituary - 29th Oct 14
A Medical Breakthrough Creating Stock Profits - 29th Oct 14
Greenspan: Gold Price Will Rise - 29th Oct 14
The Most Important Stock Market Chart on the Planet - 29th Oct 14
Mysterious Death od CEO Who Went Against the Petrodollar - 29th Oct 14
Hillary Clinton Could Be One of the Best U.S. Presidents Ever - 29th Oct 14
The Worst Advice Wall Street Ever Gave - 29th Oct 14
Bitcoin Price Narrow Range, Might Not Be for Long - 29th Oct 14
UKIP South Yorkshire PCC Election Win is Just Not Going to Happen - 29th Oct 14
Evidence of New U.S. Housing Market Real Estate Bust Starting to Appear - 28th Oct 14
Principle, Rigor and Execution Matter in U.S. Foreign Policy - 28th Oct 14
This Little Piggy Bent The Market - 28th Oct 14
Global Housing Markets - Don’t Buy A Home, You’ll Get Burned! - 28th Oct 14
U.S. Economic Snapshot - Strong Dollar Eating into corporate Profits - 28th Oct 14
Oliver Gross Says Peak Gold Is Here to Stay - 28th Oct 14
The Hedge Fund Rich List Infographic - 28th Oct 14
Does Gold Price Always Respond to Real Interest Rates? - 28th Oct 14
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General - 28th Oct 14
Functional Economics - Getting Your House in Order - 28th Oct 14
Humanity Accelerating to What Exactly? - 27th Oct 14
A Scary Story for Emerging Markets - 27th Oct 14
Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - 27th Oct 14
Europe Redefines Bank Stress Tests - 27th Oct 14
Stock Market Intermediate Correction Underway - 27th Oct 14
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans - 26th Oct 14
Obamacare Is Not a Revolution, It Is Mere Evolution - 26th Oct 14
Do Tumbling Buybacks Signal Another Stock Market Crash? - 26th Oct 14
Has the FTSE Stock Market Index Put in a Major Top? - 26th Oct 14
Christmas In October – Desperate Measures - 26th Oct 14
Stock Market Primary IV Continues - 26th Oct 14
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

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

© 2005-2014 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

Free Report - Financial Markets 2014