By Timothy Lutts, Chiel Investment Strategist and Editor of Cabot Stock of the Month
From Cabot Wealth Advisory 3-8-10 Sign up for free Cabot Wealth Advisory e-newsletter
There are six chip stocks that look great today. All are U.S. companies, all enjoy growing sales and earnings now, and all expect continued growth in the year ahead.
One of them is Atheros Communications (ATHR) of Santa Clara, California. The company designs chips used in wireless communications and wired networks. Ethernet, GPS, Bluetooth and Powerline are its strengths. The company has grown revenues every year of the past decade and it remained profitable in every quarter of 2008 and 2009. In the latest quarter, revenues grew 89% to $186 million, while earnings jumped 265% to $0.62 per share. The after-tax profit margin was 22.2%. Technically, ATHR is strong, building a little base between 37 and 38.
The other five good looking chip stocks are Cree Inc. (CREE), NetLogic Microsystems (NETL), Power Integrations (POWI), Skyworks Solutions (SWKS) and Volterra Semiconductor (VLTR).
Of the six, my favorites are Atheros, Cree and NetLogic, because of a combination of fundamental and technical factors.
But I know that less experienced investors will be attracted to Skyworks and Volterra, because their stocks are lower-priced. Trouble is, those lower prices bring greater risk. Whatever you choose, be sure you manage risk appropriately, by buying on dips, and by keeping losses small.
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Timothy LuttsPresident, Chief Investment Strategist, Editor of Cabot Stock of the Month
Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.