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The Picks of the Litter (But For Very Different Reasons): CNIT, OCZ, SWKS Under the Microscope.
By Bryan Murphy
Sep 20, 2012 11:10:29 AM PDT | No Comment(s) - Post a Comment Rating StockHQ:CNIT$1.18 +$0.12 +11.33%SWKS$24.37 -$5.11 -17.33%OCZ$4.26 -$0.02 -0.35%
Bryan Murphy
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If you're looking for some solid trading ideas at a time when the market's not yielding many, then you may want to expand your radar to cover some off-the-radar names like OCZ Technology Group Inc. (NASDAQ:OCZ), Skyworks Solutions Inc. (NASDAQ:SWKS), and China Information Technology, Inc. (NASDAQ:CNIT). Here's a closer look at why.
Although China Information Technology, Inc. may have been in an uptrend since mid-August, it wasn't until today that the strength and potential upside of this budding recovery could be fully appreciated. CNIT has fought its way above the 200-day moving average line at $1.21 to top off a well-developed, high-volume beginning of a rally. There's still plenty of room to keep rallying too.
CNIT designs and manufactures large screen display and interactive touch-displays... not the kind of screen you may have on your smartphone, but the kind you might see covering a wall, or powering a kiosk. Business has been really tough the last couple of quarters, but the chart is telling us the market thinks China Information Technology has already been through the worst of its headaches; 'the market' is frequently right.
If you're looking for the bargain stock of the week, Skyworks Solutions Inc. is it.
SWKS makes technology components, is heavily into smartphones, and is perhaps best know for being a supplier for Apple's iPhones. It's a relationship that has been fruitful for the company, though at this point is hardly a secret - traders pretty much count on good news from the company. The depth of those lofty expectations didn't hit home until today though.
This morning, Skyworks Solutions raised is fourth quarter income guidance, and maintained it was on pace for its revenue target. Did the market respond with a bullish bump? No. Instead, the market sent SWKS shares lower, to the tune of a 17% dip. Apparently the market wanted prior guidance to be blown away. Folks, when the forward-looking P/E is a plausible 10.9, there's not much else to fairly expect from the company or the stock.
Last but not least, though OCZ Technology Group Inc. has been in something of a rut for a few days after an alleged acquisition never happened - and especially in the past two days after the CEO resigned - that lull may be the ideal time to sneak into a position near multi-month lows. While the rest of the market is dwelling on the potential impact Ryan Peterson's exit may have, they're forgetting that OCZ still has a great solid-state drive technology that makes it one of (if not the) premier names in the SSD industry. It's entirely possible the next CEO may do for OCZ Technology Group what Peterson couldn't.
Either way, OCZ is dirt cheap right now at 9.0 times its forward-looking income, and it's still a viable acquisition candidate... possibly at a price close to $10.00.
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