Applied Materials: A Standout Among Tech Stocks - Barron's

"Don't faint," Barron's tech trader urges, "but it's probably time to buy tech." Despite recent comments by CEOs of Cisco Systems (CSCO) and Ingram Micro (IM) that ignited fears of softening IT spending, there is no tech bubble to burst a-la 2001. In fact, BCA Research notes that companies have, since the dot.com bust, chronically underinvested in tech, leading to a current situation of pent-up demand that, it says, should cushion any heavy-duty downside. It also points out that the number of tech groups currently above their 30-week moving average is "essentially nil," a phenomenon that has coincided with previous tech-sector bottoms.

Chip stocks have lagged even the semi-equipment makers, making the shares cheap; they are due for a bounce as chip inventories ease. Tech Trader recommends Applied Materials (AMAT) due to its strength in three businesses: semi-cap-equipment, flat-panel hardware, and thin-film solar cells. Flat panels are already rebounding from cyclical weakness, while its solar business is just beginning to take off. Shares rallied 7% last week off strong earnings numbers, but at 13x 2009 estimated earnings and 10x 2010, shares ($19) still look cheap. $30 is not out of the question.

Comments

[tessant:]

i have been saying this for months. go amat! all about the thin film...

scott
www.growthportfolio.ni...
"the facebook of investing"

2008 Feb 17 05:16 PM