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TheStreet Open House

The SOX May Provide Another Warning

Stock quotes in this article: SOXX, AMAT, AMD, AVGO, CRUS, KLAC, MRVL, NVDA, SNDK, TXN, XLNX

Applied Materials (AMAT) ($11.35 vs. $11.28 on Aug. 7): AMAT was downgraded to hold on Aug. 7 according to ValuEngine, has a reasonable P/E ratio and is just below its 200-day SMA at $11.55. Employ a "buy and trade" strategy between the value level and risky level. AMAT was a $57 stock in April 2000 as the tech bubble was popping.

Advanced Micro Devices (AMD) ($3.46 vs. $4.01 on August 7): AMD was downgraded to hold on August 7, but now it's a speculative buy, has a favorable P/E ratio and is well below its 200-day SMA at $5.96. Employ a "buy and trade" strategy between the value level and risky level. AMD was the victim of two bubbles; was a $48 price in June 2000 and a $42 stock in March 2006.

Avago Technologies (AVGO) ($34.60 vs. $37.07 on Aug. 7): AVGO was downgraded to hold from buy on Aug. 7, but is now rated a buy again according to ValuEngine, has a reasonable P/E ratio and is above its 200-day SMA at $34.37. Employ a "buy and trade" strategy between the value level and the pivot and risky level.

Cirrus Logic (CRUS) ($40.18 vs. $37.53 on Aug. 7): CRUS set a multi-year high at $45.49 on Sept. 19. CRUS has been rated a Hold according to ValuEngine, has an elevated P/E ratio and is well above its 200-day SMA at $27.00. Employ a "buy and trade" strategy between the value level and risky level. CRUS was a $74 stock in October 2000, fell to $1.50 in October 2002, and is now in deflating from a 2012 bubble.

KLA-Tencor (KLAC) ($47.13 vs. $52.03 on Aug. 7): KLAC was downgraded to hold on Aug. 7, but it's back to a buy rating according to ValuEngine, has a favorable P/E ratio and is below its 200-day SMA at $49.84. Employ a "buy and trade" strategy between the value level and risky level. KLAC was a $97 stock in April 2000 before the tech bubble popped.

Marvell Technology (MRVL) ($9.48 vs. $11.12 on Aug. 7): MRVL was a buy-rated stock on August 7, but is now rated a hold, has a reasonable P/E ratio and is below its 200-day SMA at $13.36. Sell strength to my semiannual pivot at $10.02. Note that Monday's close was just below my weekly value level, now a pivot at $9.51. MRVL was a $36 stock in January 2006.

NVIDIA (NVDA) ($13.66 vs. $14.01 on Aug. 7): NVDA was downgraded to hold on Aug. 7 and is now buy-rated according to ValuEngine, has a reasonable P/E ratio and is below its 200-day SMA at $13.90. Employ a "buy and trade" strategy between the value level and pivot and risky level. NVDA was a $39 stock in October 2007.

Sandisk (SNDK) ($45.15 vs. $41.48 on Aug. 7): SNDK was downgraded to hold on Aug. 7 and is still hold-rated according to ValuEngine, has a reasonable P/E ratio and is above its 200-day SMA at $42.85. Employ a "buy and trade" strategy between the value level and risky level. SNDK had a double bubble with a high of $84 in March 2000 and a high of $79 in January 2006.

Texas Instruments (TXN) ($28.68 vs. $28.24 on Aug. 7): TXN was downgraded to hold on Aug. 7 and is now buy-rated again according to ValuEngine, has a reasonable P/E ratio and is below its 200-day SMA at $30.30. Employ a "buy and trade" strategy between the value level and risky level. TXN was a $99 stock in March 2000 as the tech bubble was popping.

Xilinx (XLNX) ($34.36 vs. $33.15 on Aug. 7): XLNX was downgraded to hold on Aug. 7 and remains hold-rated again according to ValuEngine, has a slightly elevated P/E ratio and is on the cusp of its 200-day SMA at $34.04. Employ a "buy and trade" strategy between the value level and risky level. XLNX was a $98 stock in June 2000 as the tech bubble was popping.



Seven of the 10 stocks profiled here are undervalued fundamentally, with ADM undervalued by 46.2%. SNDK is the most overvalued by 21.3%. Six of the 10 stocks traded higher by 7.0% (SNDK) to 157.4% (CRUS) over the past 12 months. AMD was the biggest loser over the past 12 months down 43.9%. All 10 have upside over the next 12 months, but only by single-digit percentages.



At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.
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