Six Downgrades Sock Stocks in the SOX

NEW YORK (TheStreet) -- The PHLX Semiconductor Sector Index (SOXX) has gained 12.4% since setting a fiscal cliff bungee bottom at 349.79 on Nov. 16. On Wednesday the SOX had a gap open above its 200-day simple moving average at 388.68. Even so the SOX is 12.5% below its 2012 high at 444.96 set March 27.

The last time I profiled stocks in the SOX was on Sept. 25 in The SOX May Provide Another Warning as this index gapped below its 200-day SMA setting the stage for the down trend to that Nov. 16 low.

Among the 10 stocks I profiled in that post six were rated buy according to www.ValuEngine.com. Since then each of these names have been downgraded to hold.

The computer and technology sector is 9.9% overvalued with the electronics semiconductor industry 16.4% overvalued.

The daily chart for the SOX (389.69) shows rising momentum with the index above its 21-day, 50-day and 200-day SMAs at 377.20, 372.80 and 388.68. My weekly value level is 379.60 with quarterly risky level at 439.97.

Chart Courtesy of Thomson/Reuters

Reading the Table

OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: The price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: The price at which to enter a GTC limit order to sell on strength.

Applied Materials ( AMAT) ($11.34 vs. $11.35 on Sept. 25): AMAT still has a hold rating, is 19.4% undervalued with a 12 month trailing P/E at 16.2. My weekly value level is $10.61 with a quarterly risky level at $12.76. Note that Wednesday's close was just above the 200-day SMA at $11.27.

Advanced Micro Devices ( AMD) ($2.52 vs. $3.46 on Sept. 25): AMD has been downgraded to hold since the Sept. 25 post and is 47.2% undervalued. My weekly value level is $2.12 with a semiannual risky level at $4.76. AMD has been below its 200-day SMA at $4.81 since May 30.

Avago Technologies ( AVGO) ($31.99 vs. $34.60 on Sept. 25): AVGO has been downgraded to hold since the Sept. 25 post, is 9.9% undervalued and has a 12 month trailing P/E at 12.2. My monthly value level is $31.03 with a semiannual pivot at $32.88 and weekly risky level at $33.12. The stock broke below the 200-day SMA at $34.70 on Dec 13.

Cirrus Logic ( CRUS) ($28.37 vs. $40.18 on Sept. 25): CRUS has been downgraded to hold since the Sept 25 post, is 36.7% undervalued and has a 12 month trailing P/E at 12.8. My semiannual value level is $24.94 with a quarterly risky level at $29.70. The stock broke below the 200-day SMA at $31.22 on Dec. 4, but is up 91.3% over the last 12 months.

Intel ( INTC) ($21.10): INTC is the only buy-rated stock in the SOX, is 8.7% undervalued and has a 12 month trailing P/E at 9.6. My weekly value level is $19.96 with a semiannual pivot at $21.14 and quarterly risky level at $27.25. The stock broke below the 200-day SMA at $24.83 on Aug. 21.

KLA-Tencor ( KLAC) ($47.92 vs. $47.13 on Sept. 25): KLAC has been downgraded to hold since the Sept. 25 post, is 3.4% overvalued and has a 12 month trailing P/E at 11.4. My semiannual value level is $34.17 with a weekly pivot at $47.15 and annual risky level at $52.89. The stock broke below the 200-day SMA at $49.10 on Sept. 19.

Marvell Technology ( MRVL) ($8.71 vs. $9.48 on Sept. 25): MRVL still has a hold, is 25.2% undervalued and has a 12 month trailing P/E at 13.6. My weekly value level is $8.58 with quarterly risky level at $9.72. The stock broke below the 200-day SMA at $11.36 on May 3.

NVIDIA ( NVDA) ($12.65 vs. $13.66 on Sept. 25): NVDA has been downgraded to hold since the Sept. 25 post, is 26.7% undervalued and has a 12 month trailing P/E at 14.9. My weekly value level is $12.14 with a quarterly risky level at $17.66. The stock has been below the 200-day SMA at $13.20 since Sept. 4.

Sandisk ( SNDK) $43.86 vs. $45.15 on Sept. 25): SNDK still has a hold rating, is 10.9% overvalued and has a 12 month trailing P/E at 22.0. My weekly value level is $38.91 with an annual risky level at $47.37. The stock has been above the 200-day SMA at $40.88 since Dec. 7.

Texas Instruments ( TXN) ($31.25 vs. $28.68 on Sept. 25): TXN has been downgraded to hold since the Sept. 25 post, is 15.0% overvalued and has a 12 month trailing P/E at 19.3. My weekly value level is $31.25 with a quarterly risky level at $33.54. The stock has been above the 200-day SMA at $29.52 since Dec. 12.

Xilinx Inc ( XLNX) ($36.05 vs. $34.36 on Sept. 25): XLNX still has a hold rating, is 17.9% overvalued and has a 12 month trailing P/E at 20.0. My annual value level is $33.43 with a weekly pivot at $35.08 and quarterly risky level at $38.83. The stock has been above the 200-day SMA at $33.84 since Nov. 29.

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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