Put All the ‘Chips’ In?

Written by GSCR Staff   
Wednesday, 22 April 2015 06:34

In Monday’s Goldman Guide we discussed some changes that are coming which we believe will help our readers advance their satellite portfolios and reach, new ‘highs’.  Alright, the pun related to cannabis stocks was too easy.

 

One thing that will not change in our small cap world any time soon is that technology is a major sector. While a great deal of these stocks are start-ups, many of the companies we highlight are very established and are crucial pieces of the supply chain to larger mega caps. Revenue growth and stock appreciation usually has a trickle-down effect.

 

Google Inc. (NASDAQ – GOOGL - $542.92) is one of those stocks Wall Street uses to gauge the overall technology sector. The Company reports quarterly financial results Thursday. Look for a tech pop if results are good.

 

If we look deeper into technology, specifically into the semiconductor space, there is one mega player that is a terrific proxy, Intel Corporation (NASDAQ – INTC - $32.43). The Company announced its quarterly results on Monday which were mostly favorable. A vast number of tech stocks got a great bounce because of this. Below is a one year chart for INTC which illustrates the stock is trading above the 50-day EMA and could be entering another accumulation run.

 

INTC 1-Year Chart – 50-Day EMA

(Source: www.otcmarkets.com)

 

MM.04.22.15.intc1YR50dayema

 

 

We believe the semiconductor industry will continue to grow. We found an old play to capitalize on this. Lattice Semiconductor Corporation (NASDAQ – LSCC - $6.38) was a 30-30 pick back in February 2014 at $7.77. The stock reached $8.73 in April 2014 before a slow descent to current levels.

 

The Company is a downstream producer in the space and is a global leader in smart connectivity solutions, providing market leading intellectual property and low-power, small form-factor devices that enable more than 8,000 global customers to quickly deliver innovative and differentiated cost and power efficient products. The Company’s broad end-market exposure extends from consumer electronics to industrial equipment, communications infrastructure and licensing.

 

First, Lattice Semiconductor looks attractive from a growth perspective. The 5-year PEG ratio is a low 1.1%. Revenue growth is forecast by consensus analysts’ estimates at a CAGR over 5% over 2014 for FY15 and FY16. Another item we have been real keen on recently is debt. The Company has none of it on a long term basis as of January 3, 2015. An Enterprise Value/EBITDA value under 8 makes it an attractive acquisition target for a larger firm as well. Finally, a short float under 4% is a great indication of little dissent for the stock.

 

The Company reports FY15Q1 financial results on May 4th. Look for good results to give LSCC a pop. We think the stock rides the momentum wave as investors put their ‘chips’ into technology as the year progresses. Look for LSCC to reach the $8 level by Q4 of this year.

 

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.

Disclaimer:

This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports. 

Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.

It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations. 

The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small CapResearch blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.

This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.

ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLECONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS   INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLECONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.

For more information, visit our Disclaimer: www.goldmanresearch.com

Add comment
  • No comments found