However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.
There are 255 stocks listed under electronics in the CAPS' screener, but we've found more than a few that are well respected with four- and five-star ratings. Those accolades mean our 165,000 CAPS members are confident that these stocks will beat the market in the months ahead, but let's see what members are saying about the ones below:
|
Company
|
CAPS Rating Today
(out of 5)
|
Recent Price
|
52-Week Price
Change
|
Est. 5-Year
Growth Rate
|
|
Himax Technologies (Nasdaq: HIMX )
|
*****
|
$2.41
|
(31.5%)
|
13%
|
|
RF Micro Devices (Nasdaq: RFMD )
|
****
|
$4.95
|
0.8%
|
15%
|
|
TriQuint Semiconductor (Nasdaq: TQNT )
|
*****
|
$6.95
|
(7.2%)
|
17.5%
|
Source: Motley Fool CAPS; Yahoo! Finance. Price change from 8/28/09 through 8/25/10.
The markets may be suffering indigestion from the Fed's pronouncement that it feels the economy is slowing more than previously thought, but with the S&P 500 still holding on to a 2.2% rise over the same time period, CAPS electronics stocks performed significantly better. The average stock is up 25% from the year ago period. Of course, helping those returns were Power-One, which jumped more than 600%, and Cirrus Logic (Nasdaq: CRUS ) , which tripled in value.
So let's take a closer look at why investors think that some of these other companies won't be jumping from the frying pan into the fire now that the markets are roiled again.
Some spring in its step
The 19% decline in Himax Semiconductor's stock price over the past month provides investors a chance to get in on a mispricing due to what appears to be a misunderstanding of the market opportunity in China.
Wall Street says that flat panel TV growth has hit a soft spot and LCD glass maker Corning (NYSE: GLW ) will see declining sales in the quarters ahead. They might want to check in with Corning, though, at it is planning for sales growth, particularly in China where it is building a new substrate factory to handle the anticipated demand. It anticipates China becoming the world's biggest consumer of LCD TVs very soon, with glass for LCD TVs bringing in two-thirds of its revenues.
The reason is, China's going to follow the rest of the world and force a migration to a digital signal by 2015. That's got investors in LCD backlighting specialist Veeco (Nasdaq: VECO ) excited as well as China Digital TV as the same move here in the States caused a huge surge in demand for new TVs.
The CAPS community is lined up behind Himax, with 98% of the nearly 950 members rating the LCD semi shop to outperform the broad market averages. You can tune in to what's happening on the Himax Technologies CAPS page.
Driving a bargain
Having hitched its horse to Nokia, RF Micro Devices is now riding the wave down as the cell phone giant's previously issued warning that sales in its devices and services segment would come in at the low end of its guidance range proved true. Nokia hasn't been quick to meet the challenge presented by the iPhone and Blackberry and now that's coming back to haunt them. And RF Micro Devices.
Even as rival Skyworks Solutions (Nasdaq: SWKS ) doesn't have the same customer concentration, highly rated CAPS All-Star member TMFZahrim says RF Micro is working to mitigate that risk, such as through its pursuit of Research in Motion.
Chief rival Skyworks Solutions doesn't suffer from massive-customer syndrome, relying fairly evenly on sales to Motorola, Samsung, and LG Electronics. On the other hand, I believe that RF Micro has been unfairly punished for its close ties to the struggling Nokia, losing 11% of its market value over the last year while Skyworks gained 56%. RF Micro is taking action against that specific risk factor and deserves a stronger valuation than it's getting.
That's the same sort of clientele that's helped TriQuint Semiconductor get tough in the face of smart challenges from both Skyworks and RF Micro. Now that LTE seems to have beat out Wimax as the preferred 4G network, TriQuint should be able to roll through these client lists who will be seeking out communication semiconductors that can operate equally well with varying frequencies.
It's why we should see an explosion of smartphone excess in the market soon, and why twolf21 sees TriQuint winning the lion's share. But you can dial in to its growth prospects on the TriQuint Semiconductor CAPS page.
The ball's in your court
There are many factors that go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made all from a stock's CAPS page. Head over to CAPS today and share your thoughts with other investor analysts on whether you think these stocks are ready to bound higher.
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