Now it's not as though there is no tech worth owning at all. It's just that there's nothing new to buy in any of the iterations out there that has the potential to generate anything close to an upside surprise.
Think about it. Intel is as cheap as I have ever seen it, and the company has some solid product lines leveraged to the Internet and storage. But it has preannounced to the downside and is supported only by the bountiful 3.86% yield. You want to own Advanced Micro Devices (AMD)
? Good luck. Micron (MU)
? No thanks. They are just value traps with balance sheets that look tattered compared to Intel, although so does almost every other company's balance sheet.
Texas Instruments (TXN)
? I just told you it is struggling to make the numbers. That's not something that will turn on a dime. Nvidia (NVDA)
is a battleground, but the latest data points are negative. You can own Xilinx (XLNX)
and Altera (ALTR)
, but then again, they sell into communications and that market can be very spotty, despite the need for chips that allow for more speed and better graphics for cellphones.
That leaves Broadcom (BRCM)
, Cirrus Logic (CRUS)
and Qualcomm (QCOM)
, all of which are linked to smartphones. Shares of Cirrus, the sound chip company, have rallied and rallied and rallied some more. The darned thing is up 170%, so it is hardly undiscovered. I actually think that both Qualcomm, up 17%, and Broadcom, up 25%, for the year can be bought. But the charitable trust already owns Broadcom and you can't own both.
If the semiconductor companies away from those that provide to Apple aren't seeing rising demand, it stands to reason that those stocks can be avoided. Admittedly, I do find Lam Research's (LRCX)
special situation intriguing because it just made the Novellus
acquisition, and that is going to provide synergistic upside. The analysts don't care, though, and it got downgraded today, at $33, from someone who loved the stock in the $40s.
You want to own disk drive stocks when Apple doesn't rely on disk drives for its fastest growing product lines. All you are doing is playing cash flow and momentary supply-demand imbalances and talk about trades that have already occurred; Seagate (STX)
is up 80% this year. You can buy Western Digital (WDC)
, but remember, it just preannounced to the downside.