|Written by GSCR Staff|
|Wednesday, 10 June 2015 05:49|
We referenced some odd things happening around Baltimore and in the market to a popular TV show in the early 60’s, The Twilight Zone, in the Guide this week.
For those of you born after 1975, you may want to make comparisons to the adventures of Mulder and Scully in the 1990’s hit, The X-Files.
Clearly we are at a weird crossroads. The dollar has hit huge highs and its getting stronger. Oil is still cheap. The market seems to finally running out of steam after a 6 year bull run. Looking outside markets to sports, we have a Triple Crown winner for the first time in 37 years, and NBA finals between Golden State, a franchise that has not made an appearance in the finals since 1975, and Cleveland, a city who has not had a champion in any pro sport in 51 years. Clearly it is time to step back and be cautious.
Having said all that, we stated that we clearly believe that there is still money to be made in the market. In the Guide we mentioned using out of the money calls in the early days, and looking for low valuation stocks that have not been hit in the middle days. Where we are at in any correction is up for debate, but we may have a stock our readers should look at, again.
We featured IXYS Corporation (NASDAQ – IXYS -$13.37) in our 30-30 publication in November 2014 at $11.43 with a price target of $14.85. As demonstrated by the six month chart, the stock climbed to $13 in a month after our feature, and then took a tumble close to $11 just a little over a month ago. The stock has been on a big climb since, up to its current level. This makes one check mark for our thesis on stocks that could be possible buy candidates in a correction.
IXYS 6-month Chart
Secondly, the valuation picture is still great too. The forward P/E is under 11, less than half the trailing P/E of 25, with a 5-year PEG an ultra low .75.
IXYS Corporation develops manufactures and markets technology-driven products to improve power conversion efficiency, generate solar and wind power, and provide efficient motor control for industrial applications. Products include power semiconductors, digital and analog integrated circuits (ICs), and systems and radio frequency (RF) power semiconductors. IXYS offers a diversified product base that addresses worldwide needs for power control, electrical efficiency, renewable energy, telecommunications, medical devices, electronic displays, and RF power.
The Company has had a solid history of introducing new or improved products and May was no different. Products included new power modules, high speed pulse generators, and a high density solar panel. This product diversification and pace of introduction should help IXYS meet top line revenue for FY2016 estimated at nearly $400 million, a 15% rise over FY2015 from March 2015.
IXYS is a solid diverse tech play that still seems to be in favor through the normal summer sell off and what looks like a market correction. The technical analysis is still very bullish in short, intermediate, and long term EMA. Additionally, the short float of 1.6% is a great indication of long term sentiment. We think the $15 level is still realistic by the end of 3Q this year for IXYS.
Have a great day!
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