Forget Intel, This Tiny Chip Stock Is Ready To Soar
The Dynamic Wealth Report
July 15, 2009
What To Make Of This Semiconductor Rally
by Robert Morris, Editor
Did you hear the news? Intel (INTC) had a blowout quarter. Last night,
they reported sales and earnings that surprisingly soared past
everyone’s expectations. With the world mired in deep recession, nobody
was looking for a strong showing from the chip maker.
But, that’s not all.
The company also issued a much stronger than expected forecast for next
quarter. In a surprise announcement, the company said revenue and gross
margins will be significantly higher than analysts’ estimates.
This startling news is causing quite a stir.
The markets are surging. As I write this, the Dow’s up more than 200
points for a better than 2.5% gain. The semiconductor industry’s up
almost 4%. And, Intel is bounding higher by more than 7%!
So, what’s behind this buying frenzy?
Many believe Intel’s numbers and guidance signal the recession has
bottomed (at least for the tech sector). The company’s strong sales are
evidence consumer demand for PCs is starting to pick up. And, their
decision to provide quarterly guidance (which they had stopped doing in
January) is a sign order rates are becoming more predictable.
-------------Sponsor-------------
Where Can You Turn $300 Into $1.3 Million Right Now?
Our own small-company specialist, Robert Morris, has found a
way to 'sniff out' tiny penny stocks on the verge of a major breakout. And
the timing for this has never been better.
You see, the system takes advantage of an obscure SEC regulation that
sends penny stock prices through the roof.
We've seen some stocks gain 852%... 5,450%... even 17,496% in no time
flat.
Click here
for the details...
-----------------------------------
Not to mention, Intel’s CEO said in April, sales had “bottomed out” in
the first quarter and the chip industry was returning to normal seasonal
patterns. Investors were pretty skeptical when this statement was made. But, in light of the company’s strong earnings, it now bodes extremely
well for the industry.
Chip makers typically do better in the second half of the year. With the
worst apparently behind the leader of the pack, the entire industry is
setting up for a strong rally over the next six months.
The big question now is how can you profit from this trend?
One way of course is to buy shares of Intel. They’re the largest chip
maker in the world. The company is a blue chip and member of the Dow
Jones Industrials. And, with 75% of all computers in the world running
on Intel microprocessors, they’re sure to show steady performance as the
industry recovers.
But, that’s a bit boring – what about something a little sexier?
A few months ago, I recommended an amazing chip technology company called
Ceva (CEVA) to subscribers of my advisory service, Penny Stock
Breakouts. This tiny company is a leading provider of digital signal
processor (DSP) technology.
Over a billion chips worldwide run on this company’s cutting edge
technology. Everything from wireless handsets to portable audio devices
to digital cameras to digital TVs uses this technology.
The company’s customer list reads like a who’s who of the technology
sector. Companies like Broadcom, Nintendo, Nokia, Samsung, and Sony
Ericsson, just to name a few.
But, here’s the best part…
The company’s business model is absolutely ingenious.
Rather than manufacture the chips themselves, they license their DSP
technology to chip makers around the globe. They make money by
collecting a lucrative royalty on every chip sold. And, they keep their
costs low by not having to spend billions on factories, equipment, and
workers.
As you can imagine, their profit margins are sky high.
Last year, CEVA made 88 cents in profit from every dollar of sales.
That’s about double the average margin in the industry. Needless to say,
they’re a profit making machine.
And, the stock’s performance is blowing Intel away.
Over the last six months, this stock is up an amazing 52% (during the
worst of the recession). Intel, on the other hand, is up a more sedate
23%. Remember, it takes a lot more buying pressure to move Intel’s 5.6
billion shares higher than it takes to move the smaller company’s 19
million.
The good news is this is just the beginning of a longer-term uptrend.
CEVA is expected to grow earnings 20% a year over the next five years. But, I think it could well turn out to be higher. This estimate was made
before the recession bottomed. As the recovery takes hold, the company
should grow faster.
And, the shares offer tremendous upside potential.
Despite the company’s strong growth outlook, the stock trades at a much
lower P/E ratio than its larger, slowly growing competitors. I think
the company’s higher growth rate will translate into a higher P/E down
the road.
If I’m right, this stock could easily double, or even triple, in the next
twelve months.
Editor’s Note: For more profitable penny stock ideas like CEVA, take a
look at Robert’s
Penny Stock Breakouts advisory service.
• Gold ($939 per oz.)
Gold prices are surging on the falling dollar and rising oil prices.
Investors are also betting gold prices will bust through the $1,000 an
ounce barrier before the end of the year. An expected increase in Fed
purchases of long term government bonds is likely to ignite a stampede
out of bonds and into gold.
Print
Page
Bookmark Us
Home | Whitelist Us |
Terms of Use |
Privacy Policy |
Contact Us | Security |
Site Map