Coolcat's Tech Trio
04/24/2014 9:00 am EST
Using a momentum-based strategy, Kevin Kennedy looks for stocks that have broken out to new highs, and then pulled back; technically, he sees this as the opportune time to buy. Here's some trading ideas in the tech sector from the Coolcat Report.
After growing sales 54% in 2010-2011, semiconductor giant Intel (INTC) has seen revenues flatten out the past two years in the $53 billion range.
The tech titan has only reported one losing quarter in the past 12 years, and earnings per share are expected to grow 6% this year. The Dow component also pays out a 3.3% dividend.
The stock, which broke out to new highs in late December in the low $25s, has risen 5% in 2014 after a 31% increase last year. Support is strong in the low $23 range, forged by twin lows in December and February.
PMC-Sierra (PMCS) provides semiconductor and software networking solutions for storage, optical, and mobile networks. The company, which was incorporated in 1991, has a portfolio of about 700 products.
The stock is up 12% this year, after a 23% gain in 2013. Prior to that, the stock had fallen every year except 2003 and 2009, after trading above $250 in March 2000. Sales peaked above $650 million in 2011 and have since fallen 23% to $508 million this year.
The company also lost money the past two years after four straight profitable years, but is expected to bounce back with earnings of 46 cents a share next year, which would give it a forward PE of 16.
The market cap of $1.4 billion values the company at slightly less than three times sales. The stock is 9% off its April high.
Crossroads Systems (CRDS) is a recent addition to our Small Investor Portfolio. The company provides data archive solutions.
The company isn’t profitable, but filed patent infringement lawsuits against Cisco, NetApp, and Quantum in February, giving it another wild card. It had previously sued Dell, Oracle, and other firms.
Also worth noting: former Soros hedge fund manager Jeff Eberwein scooped up more than 900,000 shares of the company’s stock between October 10 and December 24, then led a $4.3 million private placement that added almost 1.3 million additional shares.
The stock broke out to new highs in early January, but has since retreated and is 28% off its highs. The company, which trades for a little more than two times annual sales of about $13 million, has a trading float of less than eight million shares.
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