Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17
7 Signs You Should Add Gold To Your Portfolio Now - 19th Jun 17
US Bonds and Related Market Indicators - 19th Jun 17
Wireless Wars: The Billion Dollar Tech Boom No One Is Talking About - 19th Jun 17
Amey Playing Cat and Mouse Game with Sheffield Residents and Tree Campaigners - 19th Jun 17
Positive Stock Market Expectations, But Will Uptrend Continue? - 19th Jun 17
Gold Proprietary Cycle Indicator Remains Down - 19th Jun 17
Stock Market Higher Highs Still Likely - 18th Jun 17
The US Government Clamps Down on Ability of Americans To Purchase Bitcoin - 18th Jun 17
NDX/NAZ Continue downward pressure on the US Stock Market - 18th Jun 17
Return of the Gold Bear? - 18th Jun 17
Are Sheffield's High Rise Tower Blocks Safe? Grenfell Cladding Fire Disaster! - 18th Jun 17
Globalist Takeover Of The Internet Moves Into Overdrive - 17th Jun 17
Crazy Charging Stocks Bull Market Random Thoughts - 17th Jun 17
Reflation, Deflation and Gold - 17th Jun 17
Here’s The Case For An Upside Risk In The Global Economy - 17th Jun 17
Gold Bullish on Fed Interest Rate Hike - 16th Jun 17
Drones Upending Business Models and Reshaping Industry Landscapes - 16th Jun 17
Grenfell Tower Cladding Fire Disaster, 4,000 Ticking Time Bombs, Sheffield Council Flats Panic! - 16th Jun 17
Heating Oil Bottom Is In.(probably) - 16th Jun 17
Here’s the Investing Reason Active Funds Can’t Beat Passive Funds—and It Worries Me a Lot - 16th Jun 17
Is There Gold “Hype” and is Gold an Emotional Trade? - 16th Jun 17
The War On Cash Is Now Becoming The War On Cryptocurrency - 15th Jun 17
The US Dollar Bull Case - 15th Jun 17
The Pros and Cons of Bitcoin and Blockchain - 15th Jun 17
The Retail Sector Downfall We Saw Coming - 15th Jun 17
Charts That Explain Why The US Rule Oil Prices Not OPEC - 15th Jun 17
How to Find the Best Auto Loan - 15th Jun 17
Ultra-low Stock Market Volatility #ThisTimeIsDifferent - 14th Jun 17
DOLLAR has recently damaged GOLD and SILVER- viewed in MRI 3D charts - 14th Jun 17
US Dollar Acceleration Phase is Dead Ahead! - 14th Jun 17
Hit or Pass? An Overview of 2017’s Best Ranked Stocks - 14th Jun 17
Rise Gold to Recommence Work at Idaho Maryland Mine After 60 Years - 14th Jun 17
Stock Market Tech Shakeout! - 14th Jun 17
The #1 Gold Stock of 2017 - 14th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

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

© 2005-2017 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

Catching a Falling Financial Knife