Despite all of Wall Street's conflict and contention, a fortunate few companies enjoy unanimous support among professional analysts. If the market's movers and shakers all believe these companies will beat the long-term averages, well, surely they will -- right?
Not so fast! With help from the 180,000 members of Motley Fool CAPS, we'll see whether these high-flying favorites deserve analysts' unwavering support. But just because Wall Street loves 'em doesn't mean you have to. Analyst sentiment is just the jumping-off place for your own research.
No. of Analysts
CAPS Rating (out of 5)
52-Week Price Chg.
|Atmel (Nasdaq: ATML )
|Broadcom (Nasdaq: BRCM )
|Energy Transfer Partners (NYSE: ETP )
|Immunomedics (Nasdaq: IMMU )
|InvenSense (Nasdaq: INVN )
*InvenSense went public Nov. 16, 2011.
Connecting the dots
The new Google JellyBean source code has been released to developers and the Android OS is likely to continue maintaining its marketplace dominance. According to the researchers at comScore, Android owns more than half of the OS market -- 50.9%, to be exact, which is 0.1% higher than earlier this year. Apple has 31.9%. Those results should prove beneficial to Atmel, whose chips drive the touchscreen interfaces on several Symbian and Android devices. At just 11 times earnings and less than half its projected growth rate, its depressed stock indeed seems to be a buying opportunity.
But Broadcom can gain similarly hopeful news from the survey results since Apple's share of the handset market was growing too, as its third-place 15%-share finish put it within striking distance of LG's second-place 19% stand. Samsung remains at the forefront with more than a quarter of the market. But with Broadcom's broad portfolio offerings of chips for set-top boxes, networking, and smartphones, it's not too reliant on any one business to succeed. And as it trades at less than 10 times estimated earnings, it still offers a discount to investors.
Energy also remains an avenue of opportunity if you prospect in the right spots. While drillers may be depressed, the oil and natural-gas-liquids market is quickly becoming a hot spot. Energy Transfer Partners sees that chance and is buying the assets of Sunoco not only to get at its East Coast network of pipelines, but more important, to have access to its lucrative liquids business. Although margins are starting to slip a bit as more players rush into the profitable sector, as evidenced by GMX Resources, Cimarex Energy, and Encana making the switch toward liquids production and away from dry gas, it's still a ripe chance to score impressive gains.
All too often, biotechs are an all-or-nothing proposition: They've got one drug they're working on and it either becomes a success or it flames out in spectacular fashion. Certainly such binary-event companies can make for an exciting ride, but it's a white-knuckle one nonetheless. Then there are biotechs like Immunomedics that have a number of irons in the fire so that if one trial fails, it still has more opportunities in the pipeline to sustain it. Immunomedics has six late-stage trials giving investors a wealth of opportunities to capitalize on, with its most advanced being its autoimmune disease treatment epratuzumab for lupus. An agreement with UCB earlier this year was lucrative for the biotech even if it took some of the decision-making process out of its hands. Look to hear more from Immunomedics soon.
Having multiple partners has also been a boon to motion-controller-chip designer InvenSense, which supplies key gyroscopic, sensor, and other technologies in a single "motion processing" chip for smartphone handset makers like HTC, LG, Motorola, and Samsung. So to see that its stock has been cut in half from recent highs might be something of a surprise, considering, as mentioned above, the Android platform's dominance in the marketplace.
But InvenSense recently reduced the high end of its guidance, since some of its handset customers were experiencing component shortages as a result of Qualcomm's yield issues. However, its battle with STMicroelectronics is probably the most pressing issue facing InvenSense at present. The two chip makers are trading charges of patent infringement on the nature of their rival's motion-control designs, which underscores the importance the technology brings to the booming smartphone market. For if there's been one area that has been on a roll throughout the recession, it's been smartphones and mobile computing generally.
And that seems to have been priced into InvenSense's stock, which trades at almost 50 times earnings even after the haircut. While that might seem a nosebleed valuation, when you compare it to its growth prospects it's not so out of whack. The chip maker might need to fall back a little more, but there are still plenty of markets to conquer, and if the STM battle goes its way, it could indeed be a dominant force to be reckoned with for years to come.
I've already bet on the rebound on CAPS, and with 74 All-Stars weighing in on InvenSense, only one doesn't think it can beat the Street from here on out. So tell me in the comments box below or on the InvenSense CAPS page whether you think it will continue to provide a roller-coaster ride for investors.
Agree to disagree
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