Time To Take Profits in Chip Stocks?

You might want to take some money off the table in chip stocks. That’s the advice this morning from American Technology Research analyst Doug Freedman.

He notes that of the 19 companies he follows, 14 have posted gains of 5%-25% since he upgraded the sector on April 4. (Just two of those stocks - Qimonda (QI) and Omnivision (OVTI) - have declined in the subsequent weeks.) And now, he says, they are due for a 4-6 week pause.

“We believe such rapid gains for an 8-week period likely require a cooling off period,” he writes. “We suggest that investors take profits during this pause and return to an overweight stance on any pull-back caused by seasonal booking patterns.”

Freedman advises focusing on “stock-specific stories with a PC and consumer focus in the back half of the year.” In particular, he says Intel (INTC), Nvidia (NVDA), Advanced Micro Devices (AMD) and Micron (MU) should all benefit from strong PC and notebook demand.

Comments

[ArtfulDodger:]

Mr. Savitz:

Such short-term market timing has most often proved fruitless --- and costly.

The best to those who follow this advice.

Rebeldog

2008 Jun 04 10:46 AM

[Outrider:]

Agreed to Mr. Rebeldog:

The chip market was favorable across the board in Q1 and were expecting an even more favorable Q2. The gains have been good if you timed it well, but it will probably go up another few points (at least) until it the companies level out because they didn't solve world hunger or something.

2008 Jun 04 11:09 AM