One of my favorite and more profitable activities in December of every year is to find stocks that have been crushed during the year but have good prospects to rebound in the following year. I usually find these stocks tend to be oversold at this time of the year due to tax loss selling. I believe by focusing on companies with strong balance sheets with rock bottom valuations you can make solid profits when sentiment improves a bit in the new year on these equities.
TriQuint Semiconductor (TQNT) – “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. The company offers an array of filtering, switching, and amplification products for RF, microwave, and millimeter-wave applications”. (Business description from Yahoo Finance)
4 reasons why TQNT will reward long term holders at under $5 a share:
- It has a pristine balance sheet with almost $1 a share in net cash.
- Numerous insiders have bought new shares in the last month.
- The stock looks to be building a bottom at this level (See Chart)
- TriQuint is selling at the bottom of its five year valuation range based on PE, P/B, P/S and P/CF
(Click chart to expand)
Power-One (NASDAQ:PWER) – “Power-One, Inc. designs, manufactures, and markets power conversion and power management solutions for the renewable energy (NYSE:RE), communications infrastructure, and other technology markets”. (Business description from Yahoo Finance)
4 reasons PWER is a solid buy at $4 a share:
- It’s extremely solid balance holds approximately $1.50 a share in net cash (over 30% of market cap).
- The median analysts’ price target on PWER is $6.75 and Barclays Capital upgraded the shares to “overweight” in November.
- The stock has a forward PE of just over 6, which is a 75% discount to its five-year average.
- Power-One is priced at the bottom of its five-year valuation range based on P/E, P/B, P/S and P/CF
OmniVision Technologies (NASDAQ:OVTI) – “OmniVision Technologies, Inc. engages in designing, developing, and marketing semiconductor image-sensor devices worldwide. The company primarily offers CameraChip image sensors, which are single-chip solutions that integrate various functions, such as image capture, image processing, color processing, signal conversion, and output of a processed image or video stream for use in various consumer and commercial mass-market applications; and CameraCube imaging devices that are image sensors with integrated wafer-level optics”. (Business description from Yahoo Finance)
4 reasons OVTI should reward investors in 2012 at $13 a share:
The company has over 50% of its market capitalization in cash with $7 a share in net cash on the books.
- OVTI is selling at under book value. Rarely do you see that outside of financials, and given that most of its book value is in cash I think is huge indicator that the shares have become much too cheap and have little downside.
- OVTI is selling at 6 times 2011 earnings and less than 1 times trailing revenues (.78).
- OmniVision is selling at the bottom of its five year valuation range based on P/E, P/B, P/S and P/CF