This Hot Sector Will Burn Investors

Senior Technology Analyst Eric Bleeker follows up with Chief Technology Officer Jeremy Phillips on a prediction from earlier this year that home-entertainment stocks were due for a crash. Since Eric called out the group on Feb. 14RoviEntropic Communications, and MIPS Technologies have greatly underperformed the Nasdaq as a group, with only MIPS managing to stay close to the index's performance. Back in February, Eric was afraid the group was performing like tablet stocks in early 2011: rising as investors got excited over a new technology trend, only to fall as the year progressed and investors lost faith that the trend would take hold.

As Eric explains, the problem isn't that the home-entertainment field lacks promise; instead, it's that a lot of the growth and profits in expanding home entertainment could be captured by dominant platforms like a future Apple TV or Microsoft’s Xbox. That's similar to tablets, where initial excitement for the industry faded when it became clear Apple was collecting almost all the profits. The important lesson: Just because a technology field is about to grow doesn’t mean investing gains will follow. To see Eric and Jeremy's full thoughts, watch the following video

Apple is the most influential company in technology and has delivered market-smashing returns for those lucky enough to invest in the company. However, with the impending release of the iPhone 5 and Apple TV on the horizon, the stakes have never been higher for the company. If you're looking for a recommendation on how to play Apple along with continuing updates and guidance on the company whenever news breaks, we've created a brand new report that details when to buy and sell Apple. To get started, just click here now.

Eric Bleeker has no positions in the stocks mentioned above. Jeremy Phillips has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On August 06, 2012, at 4:06 AM, lanceim59 wrote:

    If anyone is into small-cap high growth mining stocks, you should look into Woulfe Mining (TSX-V symbol: WOF or OTCQX symbol: WFEMF). Back in February 2012, Warren Buffet invested $80 million in Woulfe Mining which is one of the largest tungsten producers in the world! Tungsten is one of the hardest metals and is used for the tips of mining drills as well as jewelry. Woulfe Mining is projected to start production in the Sanddong Mine(one of the largest tungsten mine in the world) some time in 2013.

    http://www.moneymorning.com.au/20120613/why-warren-buffett-i...

  • Report this Comment On August 06, 2012, at 12:19 PM, alexxthegreat wrote:

    Revenues will likely easily increase 50% in one year ,YOY, at Entropic Communications. Entropic bought a company for a pittance, Trident, and is about one year ahead into making it a seamless part of Entropic Communications.

    Even a fourth grade math student knows when you

    double your income, have a lot of cash and have no debt, that's pretty good.

    According to the Law of Diffusion of Innovation, MoCA penetration is very close to point where adoption accelerates quickly to fill this 110 million gap in satellite and cable devices. IMS Research shows the market for MoCA growing from 14mil devices in 2010 to over 100 mil devices in 2016, that's a 41% compounded rate.

    It looks like Entropic is very near the tipping point to trigger massive adoption rates.

  • Report this Comment On August 06, 2012, at 2:13 PM, alexxthegreat wrote:

    Vision:

    The difference between a good company and a great company is vision by the leadership. It looks like Entropic’s planned scenario is playing out.

    Entropic has timed the Olympics, Super bowl, World cup, increase in movie streaming and Baseball’s World Series to coincide well with what Rich Duprey says is a stock that is shaking the investment world. This is the first year all of these events will hit Entropic customers all at once.

    Strong sales of Entropic Communications' MoCA chips are propelling the living room connectivity specialist higher. The set-top-box SoC business is growing like gangbusters. The picture is already beginning to become clearer concerning a YOY picture. Entropic appears to be a year ahead of schedule in making Trident a seamless part of Entropic. The dramatic run up in YOY revenues and earnings is a lot easier to achieve with all the new initiatives and products. It also coincides perfectly with the timing of the upgrade cycle by the major service providers that is well underway. It looks like what Entropic has been doing is laying the groundwork (and very methodically and carefully) for what they believe will be a massive and sustained run up at the end of the year and for the next couple of years.

    It is already clear that everywhere that major service providers expand into they will be using Moca chips and whole home set top boxes.

    MOCA is already a widespread and standard technology. Entropic has the best products. Entropic Communication’s management has been growing revenues at a staggering clip. On average, revenues have increased by double digits every year for the last four years. This year Entropic’s revenue will likely increase about fifty percent. Profits are also coming in line quickly after the Trident purchase. It is a beautiful thing when you double your income, have no debt, and have loads of cash.

  • Report this Comment On August 14, 2012, at 6:58 AM, stockcardriver wrote:

    I bought ENTR. at the ipo price of $6.00, then watched it nose dive to it's all time low but I held on in agony and thank GOD I didn't run like everyone I know who bought it at that time,it hit $12.00+. I learned a valuable lesson and yes I still hold plenty of thier stock.

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