Despite the market crashing around our ears in the last few
weeks, the seeds for the next market surge are already being
planted in the fertile intellectual soil of Silicon Valley.
Simple trading strategies
are often the best for your portfolio -- and right now as
retirement investors look for a safe place to put their money right
now, they need only to observe which areas of the broader economy
are seeing growth.
Semiconductor stocks, from large cap tech blue chips to small
cap stocks with growth potential, are really hitting their stride.
These investments are going to provide tremendous opportunity for
investors, and some of my favorite semiconductor stocks include
Cree
(
CREE
),
Integrated Silicon Solution
(
ISSI
) and
Volterra Semiconductor Corp
(
VLTR
) just to name a few. (On the other hand, these 10 horrible picks
are some of the worst
stocks to sell
right now.)
There are many reasons to be bullish on semiconductor stocks
right now, and these three small cap stocks in particular. This
week, about 5,000 independent developers (those who dream up new
"killer aps" for PCs and hand-held devices) are sharing their best
ideas (and coy disinformation) at the Apple Worldwide Developers
Conference in San Francisco. Industry analyst Richard Doherty said,
"more new millionaires walk out of that conference than any
other."
The latest "hot" device, of course, is the
Apple
(
AAPL
) iPhone 4, unveiled this week by Steve Jobs. But there's
more to technological growth than the iPhone, iPad, iPod, or
iAnything else. Chip sales are the industry bellwether, and the
widely-watched Gartner group has recently revised its 2010 forecast
for worldwide chip sales substantially higher to $290 billion, a
27% increased from 2009's total of $228 billion. Gartner had
previously projected a 2010 rise of just 19.9%. And the news keeps
getting better almost every day.
In his June 8 morning briefing this week, Ed Yardeni reported
these startling facts:
-
Worldwide semiconductor sales
soared 67.1% from their February 2009 bottom, led by an 89.7%
surge in New World sales (a.k.a. Asia Pacific). In April, these
sales accounted for 54.6% of total chip sales, double their share
in 2000. Old World sales (US, Europe, & Japan) were also up
47.6% from a March 2009 low.
-
Semiconductor bookings are nearly six times
above the level of a year ago, while shipments have more than
tripled over the same period. April's 1.13 book-to-bill ratio is
just below six-year highs, a level previously associated with the
beginnings of booms in the tech industry.
-
Information Technology moved up to fifth
in the 2010 sector derby from 8/10 in April but its price index
is down 7.7% ytd, trailing the S&P 500's 5.8% decline.
…Forward earnings surged 22.6% in 2010 to a record high, and is
up 15 straight months. Tech is one of just three sectors at a
record high in May.
In addition, worldwide PC shipments this year are on track to
rise 22% from a year ago, to 377 million units, and PC spending
will rise 12% to $245 billion, according to Gartner. In addition,
Microsoft
(
MSFT
) says it has sold over 100 million licenses for Windows 7 since
that new software came out last October, making it the company's
most successful operating system launch. So…it's "lock and load"
time for tech stocks!
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All of these developments mean bigger demand for semiconductors,
since these chips and electronic components are the engines for all
personal electronics and computers. The semiconductor sector is
going to see a surge thanks to the sale of high tech goods this
summer. Three stocks to watch to benefit from this trend are
Cree
(
CREE
),
Integrated Silicon Solution
(
ISSI
) and
Volterra Semiconductor Corp
(
VLTR
).
Cree Inc.
(
CREE
) is an innovative electronics company that is literally lighting
up Wall Street with its cutting-edge light-emitting diodes -- or
LEDs for short. These next-generation lights are more efficient and
more versatile, making the old incandescent lights of my youth
another piece of outdated technology like the eight-track, VCRs and
floppy computer disks.
Integrated Silicon Solution
(
ISSI
) makes specialized read-only memory chips and other devices,
including voice-recording chips. These chips are used in cars,
computers, instrumentation and telecommunications devices and are
integral to their operations.
Volterra Semiconductor Corp.
(
VLTR
) designs and markets low-voltage power supply chips, including
switching regulators for communications and networking
applications.
Related Article: Check out 5
Hot Penny Stock Picks
for June
As of this writing, Louis Navellier was recommending all
three of these semiconductor stock picks in his investment
newsletters to paid subscribers.
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