The huge rally in October has left a dearth of bargains in the stock market compared to just a month ago. One stock that has had a huge selloff this year due to a recent poor earnings report and guidance but should reward patient, long-term investors is TriQuint Semiconductor (TQNT).
Business description from Yahoo Finance (see here):
TriQuint Semiconductor, Inc. provides radio frequency (RF) solutions and technology for communications, defense, and aerospace companies worldwide. It designs, develops, and manufactures RF solutions with gallium arsenide (GaAs), gallium nitride, surface acoustic wave (SAW), and bulk acoustic wave (BAW) technologies.
Below are 8 reasons why there is long term value in Triquint at just over $5 a share:
- The company has a pristine balance sheet, with over $1 a share in net cash.
- The stock seems to have established a bottom at the $5 level (see chart below, click to enlarge image).
- It is selling near the bottom of its five year valuation range based on P/S, P/E, P/B and P/CF.
- TQNT has sold off some 60% over the last 6 or 7 months and now sells at just 10 times this year’s projected earnings.
- Although TQNT’s EPS growth has been erratic, it has grown earnings an average of 36% annually over the past five years.
- Triquint will benefit from the secular growth in the tablet, smart phone and e-reader space as these devices require greater RF content.
- TQNT is selling for less than 4 times 2010’s operating cash flow.
- Both Needham and Kaufman Brothers upgraded TQNT to BUY in August.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TQNT over the next 72 hours.