2 Stocks to Buy and 1 to Short in 2013

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Austin Smith: Eric, what are you looking at?

Eric Bleeker: Just a few quick... Apple component suppliers, Cirrus Logic...

Andrew Tonner: Absolutely.

Eric: After this quarter, assuming the price doesn't budge, I think it's going to be about eight times its adjusted earnings [last quarter plus the following] two quarters.

Austin: This is a company that guided significantly higher, right?

Eric: This is a company that's increasing content, will continue growing into, basically, the third quarter of next year -- the third calendar quarter. It's something that, if you're not watching it as an investor, is a great place to look.

Apple being beaten down in some overblown margin concerns, I've really pushed it back, so Cirrus Logic one.

Corning, just because. People always talk about the PC coming back. Well, we've got a catalyst for televisions coming back.

Austin: That's really where they make their money, too. If you look at screen size, that's what they want.

Eric: Yup, and larger TVs, what has happened, people bought them for mobile. It's Gorilla Glass, it's a $1 billion dollar run rate but it's an $8 billion top-line business so it hasn't made up for TVs going down.

Face it, your TV at home that's six years old, you have no reason to buy a new one. You will have, especially with Apple TV competitors like Google and Microsoft wanting to follow into the space and get more aggressive.

Corning, let's just think about if, over the next couple years, this thesis played out, it's a company that can really flex earnings, especially if sales increase it's going to get good operating leverage. If earnings go up 50% and a P/E expands from a 10 right now to 15, you could have a double, and limited downside.

I would say my third idea would be short Research In Motion. It's run up enough I'm interested in this again. The interesting thing for me, Research In Motion, what's been buffering the company was the services fees. They get a super high margin for things like BlackBerry Messenger, their infrastructure.

They are under threat right now. People talk about the iPhone subsidy model being under threat; RIM's network fees are under threat as well. Their subscriber base has actually been growing in spite of losing market share.

With a really rapid upgrade cycle over the next year or two, I think a lot of those people are going to be upgrading, moving away from RIM. I think services are going to be under pressure from that and it's going to be under pressure from telecoms trying to save costs. It's about $5 a month that will pass through.

Read/Post Comments (7) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On January 07, 2013, at 7:38 PM, TimKnows wrote:

    WOW, thank god these guys aren't getting paid to give advice!!! LOL

    What a bunch of dummies. Get an education and come back to the board when you at least complete highschool. Totally stupid ideas here.

  • Report this Comment On January 08, 2013, at 12:25 PM, TimKnows wrote:

    InfoThatSucks - expect the dummiest posts in cyber-space from this clown!!!

  • Report this Comment On January 08, 2013, at 12:56 PM, nedkit wrote:

    1. real operating system, not a toy

    2. speed

    3. security

    4. first telephone which is a complete computer with the best operating system in history of computing

    5. put whole enterprise into your pocket

    6. full duplex comm. drivers to connect you with SaaS, PaaS, IaaS, clouds, fleet of peers etc.

    7. first telephone that can run full fledged relational database like Empress, even application server

  • Report this Comment On January 08, 2013, at 4:16 PM, criticalfool wrote:

    Ok Eric, I am taking your advice and shorting RIM at $12. If I make money I give you half, but if stock goes to $40 or $60 or even $100, and I make a huge loss, I am coming after you for half the loss.

    Since you are constantly saying RIM is a short, I am taking your advice and you are now responsible for my investment of shorting RIM.

  • Report this Comment On January 08, 2013, at 4:40 PM, Arthur1111 wrote:

    I guess one fool at a time has not been working. They brought three fools along with their Apple laptop.

  • Report this Comment On January 08, 2013, at 6:58 PM, dd27 wrote:

    Why do you bother writing drivel about Rim -- what a waste of time reading this ****

  • Report this Comment On January 08, 2013, at 11:36 PM, HelloGuvna wrote:

    Didn't you already state this in a video before? I commented on it. Are you a paid bashing site? Motley Fool is awful.

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