Monday, February 28, 2011

28 February 2011 My Magic Carpet Ride

BAGAKOAA 28 February 2011 My Magic Carpet Ride

We just reached what has to be the higher end of middle class today. We actually bought doggie diapers. That’s right, little doggie disposable diapers for our 18 year old poodle Lucy. Ya see she is blind, deaf, and leaks. She appears to be in no pain and gets around pretty good except for bumping into walls. She is afraid of the big pink flamingos in the front yard which is an indication she has some sight left. But the leaking got to be too much. Imagine my dismay when I discovered that Bissell, make of the Little Green Machine was not publically traded.

And I was informed how much it will cost to replace our pseudo Persian Carpets in our house. At these prices the things better be able to fly.

Anyway, our guesses for the day were a bit off. Personal income was way up instead of flat, we thought spending would be up and it was down, and the core price index was kinda flat but we thought we would it was going to jump driving the market down. So that means we were 0 and 3 for the day. We also thought the market would erase the gains from Friday. That did not happen either.

Warren Buffet got the market all tingly by announcing he has his elephant gun loaded and has an itchy trigger finger. He is loaded with about 40 billion of spare cash.

We are going to cut it short tonight as we were building the portfolios for the first annual Salve Lucrum Stock Charity Challenge. I have sent screen shots of everyone’s portfolio who sent me stocks. We had a few people say they were going to play but did not send any stocks. If you wanted to play and sent me stock picks you should have received a screen shot of your portfolio. If you did not, please drop me a note right away.

Pick Of The Day

You might be getting sick of me picking electronic associated picks, but quite honestly it is one of the few patches where we see strong growth, Wall Street Pays for growth. We would suggest you do your homework and confirm our findings. If you are gutsy and have a few bucks to play you can get in now in the 23.50 range or wait for a couple of more positive days in the market, sector, and stock. That would be a good idea for most players. WE ARE IN AT $23.67.

Semtech Corporation, together with its subsidiaries, engages in the design, development, manufacture, and marketing of analog and mixed-signal semiconductor products. Its product lines include power management products comprising switching voltage regulators, combination switching and linear regulators, smart regulators, and charge pumps; protection devices consisting of filter and termination devices that provide protection for electronic systems from voltage spikes; and wired communication, wireless communication, and sensing integrated circuits that perform timing and synchronization functions in high-speed networks, and sensing functions in industrial and consumer applications, as well as perform radio frequency functions in industrial, medical, and networking applications. The company also offers transport and datacom products, including Serializer/Deserializer products that comprise chips and transceivers for short reach, metro, and long haul applications; and high performance transceivers for datacenter applications. In addition, it provides transceivers for wireless communications infrastructure, which comprise 2G/3G/4G cellular repeaters, WiMAX CPE and base stations, and defense and aerospace products, such as satellite communication, ground to air beacons, and unmanned air vehicles, as well as offers discrete semiconductor products consisting of rectifiers, assemblies, and other products. Semtech Corporation sells its products directly, and through independent distributors and sales representative firms to its customers. Its customers include original equipment manufacturers and their subcontractors in the computing, communications, consumer and industrial, and military end-markets in North America, the Asia Pacific, and Europe. The company was founded in 1960 and is headquartered in Camarillo, California.

Fundamentally SMTC (That is the link to FinViz if you want to play along) has a reasonable P/E ratio. They have no debt and an almost 60% gross margin.(though its operating margin seems a bit soft at 14%). The target price of 27-28 gives us a little margin of safety. ROE could be a little better at 12.7%.

IBD like the stock quite a bit giving it a 95 rating. The down side on the IBD check was the accum/dist rating of a D+. As a reminder this is an indicator of how institutional monies may be flowing in and out of a stock. A and B means money is flowing into the stock supporting demand for it and helping the pricing. D and E means the monies tend to be leaving the equity putting downward pressure on the stock. That is why we said at the beginning you might want to wait until we can see the chart finish building a handle on what seems to be a cup that began in Mid December. Again we are in at 23.67 and have a stop at 21.75. We are looking for 30 by summer.

Salve Lucrum


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