"A layer of risk is removed from the market and a look at Semiconductor stocks where we have all been burned before"

Dow Jones Industrial Average 12638.74 (Down) Week Ending 05-06-2011


Double Pinochle

Sometimes you just to get a little bit lucky. The US Government and our President Barack Obama took a calculated high risk chance to capture the world's number one bad guy and drew Double P's. More like Double P's and a Run. If you are a Pinochle player you understand what this means and the feeling it emotes.   Not only did they capture and kill Osama Bin Laden but took possession of computers and disk drives with a mountain of bad guy data and plans. Evidently Al Qaeda did not study American Film-Noir or history about justice and understand that we always catch the bad guy. Ask Al Capone, John Dillinger, Bonnie and Clyde, Pablo Escobar and Manuel Noriega. That is how it always ends in real life and the movies.


Aces around

With this development, a whole bunch of air was let out of the world risk balloon. It was suddenly "Serenity Now" time. With Bin Laden gone, a layer of terrorist command and control is removed from the world scene and at the minimum Al Qaeda is disrupted in the short term, although still in cell groups that can do damage autonomously.  Commodities relaxed and dropped in price. Crude oil came all the way down to $97.00 a barrel. Maybe we can get back to looking at the clean fundamentals of business when evaluating stock values .

I decided to talk this week about Semiconductor stocks. If you have been around awhile trading you probably have gotten burned in the past like in late 2008 by some of these stocks and have shyed away from them as a group.  But there is allot of buzz going on right now. Blackstone Group LP (Symbol BX)  are offering an IPO of  Freescale Semiconductor Inc of 43.5 to 50 Million shares at $22 to $24 dollars per share. Freescale Semiconductor Inc is also part owned by TPG Capital, Carlyle Group and Permira Advisers LLP privately. Freescale Semiconductor is making the chips for Alcatel-Lucent's new lightRadio cubes.

Also Nvidia (symbol  NVDA, $19.82)  is to acquire Icera, to add 3G/4G baseband to it's mobile processor line. So that puts them in good position along with Qualcomm, Broadcom, and Mediatek as having the ability to integrate 3G/4G baseband right on to their chips. Icera owns 550 patents.(Source RCR Wireless).

So what can you buy based on fundamentals? Nvidia (NVDA) as mentioned above is good. Altera Corp.(ALTR) and Xilinx Inc.(XLNX) look fine.

Triquint Semiconductor Inc. (TQNT), Skyworks Solutions (SKWS), Qualcomm Inc. (QCOM),  and Atmel (ATML) all could find a place in your portfolio.

Don't forget about my small-cap favorite in this group, that I have mentioned a fw times before LTX-Credence Corporation (LTXC, $8.72). Still a good buy.

If you are looking for a dark horse in this semiconductor area, one pick might be to purchase Marvell Technology Group Ltd., (MRVL, $14.80). Marvel has filed a lawsuit in San Francisco Superior Court against Goldman Sachs and two account executives, alleging Goldman Sachs manipulated the 2008 financial crisis to defraud the two Silicon Valley executives of more than $100 million. Certainly they haven't done a good job promoting the stock.                                                                                                                                                                                                                                                                       

So what are you going to buy tomorrow? (Probably some speculative commodity, gold or oil stock!) These Semiconductor stocks are probably a better idea, stick with one of them.

Freewilly  

Beware the "Ides of August" - there are just too many people who are too bullish right now

It really scares me when I hear whole panels of people on the finance shows and they are all so bullish after such a run-up we had in the month of July. There is no way that this thing is going straight up from here. it just doesn't work that way. So patience is the watch word and if you have taken profits here keep them on the sidelines for now.
There are a few technology stocks here that you can keep in mind that have very good balance sheets. Two semi-conductor stocks that have 3:1 Asset to debt ratios. Those are Marvell Technology, (MRVL), and Triquint Semiconductor , Inc. ,(TQNT). I do not own either of these yet but would be interested after the correction.,
My favorite stock in the technology sector and one that I do own is InterDigital , (IDCC) , that is a company I consider to be a baby Qualcomm in the 3G cellular space. They own 3000 patents in the 3G technology and are very well positioned for the transition in cellular phone technology for voice and data. The proliferation of the Apple I-Phones and the RIM Blackberry's sucking up bandwidth with video and Internet web browsing are taxing the current cellular systems and changes will need to be made quickly to keep up with customer demand.

So. for the short term , keep your powder dry and raise some cash for the sidelines.

Best Regards,

freewilly