|Written by GSCR Staff|
|Tuesday, 03 June 2014 08:48|
In case you missed it, Ann B. Davis, mostly known as ‘Alice’ in The Brady Bunch passed away over the weekend at 88.
We wish her family condolences. It does not take long for the talking heads to start throwing words around like iconic or visionary, etc. Maybe it is our nostalgia, but most people forget the original show aired for just five seasons in the late 60’s and early 70’s. I can name off probably 10 shows easily with longer run times right off the top of my head.
This remembering things in a better light than they were in reality seems to be function of history. Simultaneously, while we are in the moment we think everything is gloomy. We pointed out a positive May yesterday in the Guide and discussed some important June trends in small cap tech. The bottom line is there are some great opportunities this summer despite the sluggish market and what is historically a sell-off season. It is not all doom and gloom.
One of the tech stocks that has been a bright spot was a Market Monitor pick from early April 2013, RF Micro Devices, Inc. (NASDAQ – RFMD - $9.40), which is up over 81% since then. It has not been a steady rise, but an extremely hot stock in 2014, more than doubling since late January. The question is where will this go this summer?
On the downside the trailing 12-month P/E is an astronomical 235, a possible indication of the end of the run. However, on the plus side the forward 12-month P/E is just over 10 and the 5-year PEG is under 1. These are strong forward price/earnings and price/growth indications. Consensus analysts’ estimates project a CAGR of just over 9.5% for the next two FY above the current results from March of $1.15 billion. This is definitely Growth at a Reasonable Price (GARP).
RF Micro Devices will continue to benefit from its exposure to the mobile device market and is a great play on small cap tech with a diverse product line. With a relatively low short float just over 7% and very bullish 50-day Daily Moving Average, there are strong signals the momentum will continue as institutional investors look to ‘window dress’ with winners over the next month or so. We say RFMD can shine all the way up to $10.25 sometime in early Q3.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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