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Is there an analyst out there who can guarantee you a 10% profit for a stock trade. I don't think so. But I at the The Market Oracle think you can.
(Kindly trade at your own risk as even though we say guarantee, there is still chances that you will lose 10% instead. I am saying guarantee based on my own assumption, belief and analysis which is not 100% correct, even though it is 99.9% correct most of the time. Kindly read this article for your own pleasure only).
I have bought this stock at $18.49 and now I am up by 2% or more. However, I believe this 2% is just the beginning.
Looking at the technical analysis, all the technical indicators point to a very strong buy. The volume, Bollinger Band, Stochastic, MACD and Parabolic all combined and form a super masterpiece which indicate a continuous super upward move.
I have done few analysis on this stock in the past and have profit for more than 15% for this stock before, I believe the time is ripe again for this stock to shoot to the moon and bring me my gold bar.
Honestly, I do not like to be in and out of trade all the time. I prefer to invest in a stock and hold it for more than few years, if it is possible. I think I have finally find my match. I think I would like to hold this stock for few years as long as Apple continues to shine with its products.
Only times will tell whether I am right or wrong, however, if I am wrong and if I lose more than 10% trade on this stock, I will close down this blog and will never again blog about stock market. This is my promise to all my loyal visitors of my humble blog that I am very confidence of all my analysis and the things that I have advised and mentioned.
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Disclaimer : This is not an investment advisory, and should not be used to make investment decisions. Information in The Market Oracle Blog is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The charts provided here are not meant for investment purposes and only serve as technical examples. Don't consider buying or selling any stock without conducting your own due diligence.
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Undervalued Companies Buying Back Their Own Stock
By Eben Esterhuizen and Alicia Sellitti, Kapitall | More Articles
January 11, 2011 | Comments (0)
There are a number of different metrics used to calculate value, e.g. price-to-book or price-to-earnings ratios. But we decided to take a somewhat different tack, instead comparing current stock price to average analyst target price (used as a proxy for fair value).
Financial analysts usually issue a target price for a stock along with a "sell," "hold," or "buy" recommendation, reflecting what they deem to be its fair market value. The average target price is calculated by taking the mean of a group of analysts' individual target prices. When a stock trades below this average target price, we considered it to be trading at a discount to its fair market value.
Not that this is a fail-safe approach by any means -- you'll still need to do your homework on your investments. Use this list as a starting point for you to do your own research.
As a secondary screening method, we narrowed down our universe of stocks according to company buyback volume. Share repurchases offer a pretty strong signal that company management believes its stock to be undervalued. And companies with buyback programs in place also offer the added bonus of higher earnings per share, as well as improved financial ratios.
The following list of stocks are undervalued relative to their average target prices, and have all announced stock buybacks over recent weeks. Do you think these are undervalued? (Click here to access free, interactive tools to analyze these ideas.)
Target price data sourced from Finviz, buyback data sourced from RTT News. The list has been sorted by the discount to average analyst target price.
Company | Buyback Program | Valuation |
|---|---|---|
On 12/3 the company announced a buyback program of $100M, representing about 12% of its market cap | Current price at $18.3 vs. average analyst target price of $27.4 (implies a discount of -33.21%) | |
NANOMETRICS (Nasdaq: NANO) | On 11/29 the company announced a buyback program of $10M, representing about 4% of its market cap | Current price at $12.22 vs. average analyst target price of $17.25 (implies a discount of -29.16%) |
Service Corp. International (NYSE: SCI) | On 11/11 the company announced a buyback program of $200M, representing about 10% of its market cap | Current price at $8.02 vs. average analyst target price of $11 (implies a discount of -27.09%) |
Gleacher & Company (Nasdaq: GLCH) | On 10/27 the company announced a buyback program of $25M, representing about 7.75% of its market cap | Current price at $2.37 vs. average analyst target price of $3.25 (implies a discount of -27.08%) |
Strayer Education (Nasdaq: STRA) | On 10/28 the company announced a buyback program of $150M, representing about 7% of its market cap | Current price at $118.83 vs. average analyst target price of $159.25 (implies a discount of -25.38%) |
Select Medical Holdings Corporation (NYSE: SEM) | On 11/4 the company announced a buyback program of $100M, representing about 9% of its market cap | Current price at $7.21 vs. average analyst target price of $9.5 (implies a discount of -24.11%) |
Cirrus Logic (Nasdaq: CRUS) | On 11/4 the company announced a buyback program of $80M, representing about 6.5% of its market cap | Current price at $17.52 vs. average analyst target price of $22.5 (implies a discount of -22.13%) |
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Cirrus Logic Is a Chip Leader
by Eric Bleeker - November 1, 2010
This article is part of our Rising Star Portfolios series.
Investors looking for growth stocks have to feel the sweat starting to clam up on their hands. It's not that they haven't been rewarded well lately, but things are starting to feel a bit,bubbly. As my colleague Eric Jhonsa pointed out in his article "Does the Market Have a New Nifty 50?," investors desperate to find growth in a stagnant economy have crowded into a wide swath of stocks with strong growth potential, especially in fields like cloud computing.
Just take a look at this group of recent highfliers. While they share some commonalities (an association with cloud computing or e-commerce), the overarching theme is they're all recent growth stories and follow an escalating trend.
Company
1-Year Return
Current P/E
F5 Networks
151.1%
71.8
Travelzoo
154.4%
38.4
VMware (NYSE: VMW)
86.8%
108.9
Riverbed
168.5%
191.2
Baidu (Nasdaq: BIDU)
185.1%
93.4
The worst part of the run-up is that most of these stocks now trade at nosebleed levels, P/Es are trading near or above triple digits in most cases, and even from a cash flow perspective, the multiples stay pretty rich.
Should investors looking for growth at a reasonable price pack up, fly down to Mexico, and sip on margaritas while waiting for valuations to come down? Though that sounds mighty fine, I'd hold up on the travel plans. Some growth areas have become overheated thanks to broader concerns across the semiconductor industry, but one continuing trend -- the growth of smartphones -- is presenting fantastic opportunities. Chief among these is audio products whiz kid Cirrus Logic (Nasdaq: CRUS).
Cirrus what?
Cirrus Logic is a semiconductor company that has historically served two major end markets: energy and audio products. While the company aims for a 50/50 revenue split between these segments, booming demand for its audio chips has led to that segment now comprising 70% of its sales.
Cirrus is selective in the niches it targets. Being a small player, offering a full line of audio products against a larger rival like Texas Instruments (NYSE: TXN) -- which boasts massive scale and a huge sales staff adept at cross-selling thousands of components -- would be a death wish. Instead, Cirrus targets more customized, complex, high-end audio chips. These high-end chips can offer better audio quality, a smaller size, and superior battery life to the gadgets they're in.
That's a great position to have leadership in, because if there's one thing that small and power-hungry smartphones crave, it's power savings and smaller chips. Take, for example, Cirrus' relationship with Apple (Nasdaq: AAPL), which has to be considered one of the company's greatest success stories.
Apple's a company of uncompromising vision and quality when it comes to its products. Cirrus secured a single design win with the company in 2005, but thanks to the audio quality and power improvements that its components offer, Apple has expanded Cirrus' products across its whole lineup. That kind of customer consolidation can be scary, but it also speaks to the quality of Cirrus' designs and expertise.
Why I'm buying
Here are several of the key reasons why I like Cirrus Logic as an investment:
Customized focus: A level of product customization in the semiconductor world is hardly unique; however, Cirrus Logic takes extra steps to avoid getting into the race-to-the-bottom pricing wars seen in the more commoditized areas of audio products.
Great valuation relative to growth prospects: Remember those sky-high P/E levels you saw at the top of the article? Well, be relieved that Cirrus Logic trades at just 11 times trailing earnings, 9 after netting out cash. Other companies benefiting from the smartphone boom like TriQuint (Nasdaq: TQNT) and Skyworks (Nasdaq: SWKS) also have well-capitalized balance sheets and should be winners of the smartphone shift, but they trade at steeper multiples. It's hard to top Cirrus' mix of established products, new growth areas for upside, and very reasonable valuation.
Excellent end markets: Aside from wins in smartphones and new media-centric tablets, Cirrus also has strong design wins in varying smart-grid technologies. Key smart-grid customers trade at multiples above 40 times, so once again there's an opportunity to get exposure to a key growth market at a cheaper value than seen in end customers.
Reliable legacy products: While quite a bit of focus is put on Cirrus' growth areas, it also has established high-margin legacy products across the audio and energy markets. In energy, for example, while smart-grid products are still ramping up, older seismic and metering products bring in a reliable stream that forms a majority of the segment's current revenue.
Focused management: The problem with buying component companies to play a trend like smartphones is that while the company may have some nice design wins, it's hard to understand its focus. Cirrus is very upfront with a differentiated strategy and puts a focus on a unique work culture that keeps its design experts happy and motivated.
A great balance sheet and no tax man to worry about: In addition to nearly $174 million in cash on its balance sheet, the company has $460 million in net operating losses, which assures that the federal tax man won't come calling for a long time.
Big drop, big opportunity: Cirrus recently issued guidance that pointed to a sequential revenue decline this quarter. Investors, skittish over any sign of semiconductor weakness, bailed out of the stock, sending shares down 20% since earnings. However, after posting outstanding 23% sequential gains last quarter (well ahead of just about any semiconductor company), the company was due for a breather. I don't think the light quarter-over-quarter weakness affects the long-term rationale for buying the company, and I see the drop as an opportunity to get into Cirrus on the cheap.
Why I'd sell
The greatest risk to Cirrus Logic is also the source of much of its recent strength: its close relationship with Apple. Make no mistake, while Apple might have that distinguishing laser-like focus on quality, it's fighting for every penny it can from suppliers. While I'm encouraged by Cirrus' rapid expansion across Apple's product lines, if the company were to lose its contracts with Apple, the blow to their stock price would be large. Last quarter, Apple contributed about 44% of Cirrus' revenue alone, up from 34% in the previous quarter. Any way you slice it, Apple's an integral part of the Cirrus growth story.
© 2010 UCLICK L.L.C.Last edited by Prince damin on Mon, 11/01/2010 - 22:56 | Write to author: Eric Bleeker |
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