have been keeping tabs on the semiconductor sector recently, watching many of these firms either trend flat or head south for the last several months. While investors have been glued to the price of oil and the decline in housing, tech stocks have very quietly made a variety of technical bottoms. In the meantime, many classic technology names are trading at discounts to their historical forward price/earnings ratios.
That may change later this spring. The semis are a very cyclical group and they discount economic activity very early. In other words, their prices began to reflect a slowing economy and weaker consumer spending last summer. As a result, most smaller-cap semi stocks have had a tough go of it lately; The Philadelphia Semiconductor Index, or SOXX, fell over 20% last spring as emerging markets corrected and has since clawed its way back only roughly half the distance. With the sector off the radar of most investors and valuations in the sector compelling, there is a strong likelihood of a rebound in the group before summer. And when one looks through the program from last week’s Consumer Electronics Show, it’s apparent technology continues to be ever more pervasive in our lives. Chip demand is alive and well.
Monday, January 15, 2007
Tower (TSEM)'s Way is Not Simple
I have been collecting TSEM because the analysts were against it, saying that the semi business, being cyclical, was facing a crisis. And TSEM being a small, struggling outfit, was bound to suffer greatly. What is happening is exactly the contrary: demand for chips is growing, TSEM is prospering. Even the free newsletter Taipan pushes the same line. I