Seeking Alpha
Long/short equity, tech, banks, oil & gas
Profile| Send Message|
( followers)  
In finance, a contrarian is one who attempts to profit by investing in a manner that differs from the consensus, when the consensus opinion appears to be wrong. A contrarian believes that certain crowd behavior among investors can lead to exploitable mispricings in securities markets. For example, widespread pessimism about a stock can drive a price so low that it overstates the company's risks, and understates its prospects for returning to profitability. Identifying and purchasing such distressed stocks, and selling them after the company recovers, can lead to above-average gains.
Times of market turmoil often present the best buying opportunities for savvy investors. Contrarians find their best investment opportunities during times of panic. Cramer says “No one ever made a dime panicking.” The bear market of 1974 gave Warren Buffett the opportunity to purchase a stake in the Washington Post Company (WPO). This one investment subsequently provided Buffett with more than a hundred fold return. One of Buffett's famous quotes is "Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it."
Our innate instincts encourage us to depart a sinking ship. This survival tactic impacts the way we invest. When market panic creates opportunities to buy stock in solid companies with sound prospects, hopefully you've kept your powder dry and taken advantage. The market is clearly at an inflection point. To open a position you must have courage in your convictions, just remember, fortune favors the bold. A market correction provides opportunity to buy great names at a discount price.
The table below lists 16 semiconductor stocks providing potential buying opportunities due to possible oversold conditions and a discount to consensus estimates. Staying keenly aware of any sentiment change regarding these stocks, I noticed a positive move across the board for them today. My instincts tell me the supply chain disruption from the Japanese tragedy won’t be as bad as some have predicted. Once everyone realizes Japan is on the mend, the Middle East turmoil is under control, European debt issues are being solved, the street's profit taking is over, and the global economic recovery continues, I see semiconductor stocks regaining past glory and reaching new highs.
Is the sentiment change regarding these stocks justified, or is this a case of the baby being thrown out with the bath water? Considering the broad based sell off, I submit it is the latter.
Here is the watch list image of 16 semiconductor stocks possibly oversold over the last few weeks and approximately 10% or greater off their 52 week highs:
Click to enlarge
Please review the following details regarding the semiconductor stocks on the above watch list. Consensus estimates were provided by Yahoo Finance. With the SOX index off approximately 9% over the last two weeks, I believe these stocks were unjustly sold off and present excellent buying opportunities. I am considering starting a position in one or all of these stocks depending on the market’s reaction to current events in Libya and other news items.
(NASDAQ:ALTR) Altera Corporation – Designs, manufactures, and markets programmable logic devices (PLD), Hardcopy application-specific integrated circuit (ASIC) devices, pre-defined design building blocks, and associated development tools. Median price target by 27 brokers is $41. High target $55.
(NASDAQ:AMAT) Applied Materials, Inc. - Provides Nano manufacturing technology solutions for the semiconductor, flat panel display, solar, and related industries worldwide. Median price target by 17 brokers is $17.50. High target $22.
(NYSE:AMD) Advanced Micro Devices, Inc. Co – Operates as a semiconductor company in the United States, Japan, China, and Europe. S&P Analysts 500 upped their price target to $9.58 today.
(NASDAQ:BRCM) Broadcom Corporation - Designs, develops, and supplies semiconductors for wired and wireless communications. Median Price target by 37 brokers is $49. High target $62.
(NASDAQ:CREE) Cree, Inc. - Develops and manufactures light emitting diode (LED) products, silicon carbide (SiC) and gallium nitride (GaN) material products, and power and radio frequency (RF) products. Median Price target by 27 brokers is $65. High target $100.
(NASDAQ:CRUS) Cirrus Logic, Inc. - Develops high-precision analog and mixed-signal integrated circuits (ICs). Median Price target by 4 brokers is $25. High target $33.
(NASDAQ:INTC) Intel Corporation – Designs, manufactures, and sells integrated circuits for computing and communications industries worldwide. Median Price target by 40 brokers is $26. High target $31.50.
(NASDAQ:KLAC) KLA-Tencor Corporation - Engages in the design, manufacture, and marketing of process control and yield management solutions for the semiconductor and related Nano electronics industries. Median Price target by 15 brokers is $52. High target $60.
(NASDAQ:MRVL) Marvell Technology Group, Ltd. - Designs, develops, and markets analog, mixed-signal, and digital signal processing and embedded microprocessor integrated circuits. Median Price target by 31 brokers is $22.50. High target $27.
(NASDAQ:MU) Micron Technology, Inc. - Together with its subsidiaries, engages in the manufacture and marketing of semiconductor devices worldwide. Median Price target by 21 brokers is $14. High target $18.
(NASDAQ:NVDA) NVIDIA Corporation - Provides visual computing technologies that generate interactive graphics on workstations, personal computers, game consoles, and mobile devices. Median Price target by 25 brokers is $23. High target $40.
(WFR) MEMC Electronic Materials, Inc. - Engages in the development, manufacture, and sale of silicon wafers for the semiconductor industry worldwide. Median Price target by 21 brokers is $15. High target $18.
(NASDAQ:QCOM) Qualcomm - Engages in the development, design, manufacture, and marketing of digital wireless telecommunications products and services Median Price target by 34 brokers is $64.50. High target $80.
(NASDAQ:SNDK) SanDisk Corporation - Designs, develops, manufactures, and markets NAND-based flash storage card products that are used in various consumer electronics products. Median Price target by 18 brokers is $60. High target $72.
(NASDAQ:TXN) Texas Instruments Incorporated - Engages in the design and sale of semiconductors to electronics designers and manufacturers worldwide. Median Price target by 30 brokers is $38. High target $44.
(NASDAQ:XLNX) Xilinx, Inc. - Engages in the design, development, and marketing of programmable logic solutions. Median Price target by 24 brokers is $34. High target $40.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: 16 Semi Stocks Providing Potential Buying Opportunities