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  • ATML, LTXC Advance to the Head of the Small Cap Semiconductor Class 0 comments
    Jul 30, 2009 2:29 PM | about stocks: XCRA, ATML

    Atmel and LTX-Credence are Starting to Lead the Small Cap Semi Pack

    Semiconductor stocks Atmel Corp. (NASDAQ:ATML) and LTX-Credence Corp. (LTXC) were up firmly yesterday, even though the rest of the semiconductor industry didn't follow their lead. The same goes for the week so far - these two stocks are up, but the group as a whole has been flat. Nevertheless, and perhaps despite, the semi industry's two best today may also be the two best stock prospects going forward,

    Atmel Corp. (ATML) was up 2.2% following Tuesday's announcement that the company was debuting its first in a series of 400 Mhz ARM926-embedded MPUs. However, since about three people in the whole world know what that means (and even fewer investors), it's difficult to attribute the gain to the news. That's a good thing though, as it means ATML shares are pointed higher under their own power.

    Though profits have been hit and miss of late, note that the company swing to a profit during Q1 of this year... a time when earnings were elusive at best. If analysts have underestimated the EPS this time around with the forecast of a 5 cent loss for the quarter, Atmel shares could get even more traction.

    Technically speaking, the stock is getting positioned to pop out of a very long-term wedge shape.

    LTX-Credence Corp.
    (LTXC) ended the day higher by 9.2% on no news whatsoever. The last word form the company came in mid-July following the development of a couple of big sales opportunities stemming from Maxim Integrated Products and Blood Stem Cell Storage Company. There was no certainty or time frame associated with the news though.

    Most likely, LTXC shares took a cue from Kulicke and Soffa (NASDAQ:KLIC) following the company's announcement of Q3's results and Q4's estimates. In a nutshell, Kulicke's third quarter was a disaster, but the company is looking for revenue to come in at mre than twice what analysts originally expected.

    Though Kulicke's outlook may be excessively optimistic, LTXC's chart suggests investors were already expecting a parallel improvement in semiconductor sales from LTX-Credence. The slow U-shaped reversal has continued on with growing volume... which is frequently the missing piece for many failed chart recoveries.

    As for an outlook regarding all the small cap semiconductor stocks, the S&P 600 Semiconductor Index as well as the S&P 600 Semi Equipment Index both look more than a little overbought. As such, a bullish industry/market-cap bias is discouraged.

    However, both Atmel (semiconductor manufacturer) and LTX-Credence (semiconductor equipment and materials) have lagged their respective indices, and only recently have they started to move. These two stocks could indeed be worthy purchases at these prices.

    Stocks: XCRA, ATML
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