Think Spring, Think Clean

For those who keep track, Punxsutawney Phil saw his shadow Sunday morning which means six more weeks of winter.  We are not sure how well a groundhog can predict the weather.  To quote Phil Connors, aka Bill Murray, from Groundhog Day, “I think winter will last until March 21^st.”  We mentioned that movie’s famous insurance salesman, Ned Ryerson, a few weeks back in the Guide so thought we would throw in another reference.

As far as thinking spring, or new, kudos to the NFL for coming into the 21^st century on the halftime show with Bruno Mars.  On the flip side, I am not sure what Chrysler was thinking by digging up Bob Dylan for its commercials.  Anyone under 35 probably had no idea who that was.

We bring these tidbits up as a lead in to doing some spring cleaning in our own Market Monitor ‘portfolio’ as the market has been giving many investors and traders the old man winter treatment for a month.  We will take a look at a 2013 pick.

We featured Ultra Clean Holdings, Inc. (NASDAQ – UCTT - $10.88) back in the middle of October and the stock closed yesterday up nearly 54% over that time.  The Company is a supplier to the technology industry with manufacturing systems and solutions that are tailored for original equipment manufacturers in the semiconductor capital equipment, flat panel, medical, energy, and research industries.  In essence that Company builds the equipment that these OEM use to build their products.

The stock itself looks like a keeper for the time being.  The technical analysis pertaining to the DMA indicates a bumpy ride or possible down turn in the short term, but turns bullish in the intermediate and long term.  Another huge plus is the simple valuation.  With the run on the stock the trailing 12-month P/E nearly 108, but 2014 revenue forecasts of nearly $500 million puts the forward 12-month P/E under 13.  Still a great value.

The bottom line is technology will still be a sector to be in for 2014.  UCTT is a nice play on this theme and the stock has room to run to $12.50 by the middle of 2Q14.

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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