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Penny Stocks Struggle In November, Creating Opportunity For Gains

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Penny stocks weakened beginning in October, with market players focusing on tax cut legislation hoping to boost blue-chip earnings in upcoming quarters, according to the Investopedia Stocks to Watch for November. The Russell-2000 small-cap index suffered, while the S&P 500 and Nasdaq Composite rose to all-time highs.

Speculative fervor through year’s end is expected to push penny stocks, although improved returns may need to wait until the 2018 January Effect.

Plug Power Inc. had the best group performance in October, lifting more than 18% to a 2-year high, while other picks built basing patterns that signal a balance between buyers and sellers. Such issues are expected to gain ground as market players take profits in tax-sensitive blue chips and move into other opportunities.

Biotech stocks appeared to have topped out for the year after Celgene Corp. triggered a broad-based decline after withdrawing a critical drug application. As a result, the November list focuses on suffering technology stocks that could take advantage of broad fourth-quarter market leadership.

The top three penny stocks in November returned from the October list.

1. Plug Power, Inc. (PLUG)

Source: Investopedia

Plug Power, Inc., a manufacturer of fuel cells, rose from number seven in October to lead the November list.

The company sold off from a split-adjusted $1,565 in 2000 to an all-time low at 12 cents in 2013. The stock turned higher in March 2014, then stalled at $11.72 before falling to 83 cents in March 2017.

In the last seven months, the price spiked to $2.70, before suffering another fall. A breakout should target the May 2014 low at $3.65, which would mark a high percentage rally from the current level.

The company delivered a record third quarter this year, deploying nine GenKey sites, comprising 2,753 GenDrive units, and a unit increase of over 200% from the previous quarterly record.

Fulfillment of multi-site deals announced in the second and third quarters with Amazon and Walmart comprised the majority of order volume for the third quarter.

The company continued the expansion of its blue-chip customer base, successfully securing contracts with two large manufacturing clients in the U.S. automotive industry and one new customer in Europe. It completed $44 million in new bookings, bringing the year-to-date total to nearly $160 million.

2. MicroVision, Inc. (MVIS)

Source: MicroVision

MicroVision, Inc., a provider of ultra-miniature projection display and sensing technology, rose from the number 9 spot in October to number two in November.

The stock topped out at a split-adjusted $548 in 2000 before entering a downtrend that continued into a 2012 low at $1.11.

A 2013 bounce to $3.49 carved resistance, ahead of multiple reversals that have outlined a rectangular basing pattern. The stock rebounded in October 2016, entering an uptrend that has reached the upper half of its persistent trading range.

The stock broke out to a 22-month high in September and has since settled near $2.75, signaling an upside that could reach the 2015 high at $4.23.

The company in August sold 1.5 million unregistered shares to a private investor who is also a current shareholder at a price of $2.10 per share, for aggregate consideration of $3.15 million. MicroVision intends to use the proceeds from the issuance for general corporate purposes.

MicroVision’s display and sensing solution can be adapted to an array of applications and form factors. The company’s business model and product line offering includes display and sensing engines, licensing its patented technology and selling components to licensees for incorporation into their scanning engines.

In September, MicroVision and WPG Holdings, a distributor of semiconductor components in Asia, entered into an agreement for distribution of MicroVision’s line of PicoP scanning engines across Asia.

3. BioDelivery Science International, Inc. (BDSI)

Source: Investopedia

BioDelivery Science International, Inc. rose from the number 10 spot in October to the number three spot in November.

The stock broke above 7-year resistance at $8.26 in 2014, then rallied to an all-time high of $18.48 a few months later. A pullback in 2015 triggered a failed breakout, delivering a decline that continued into a November 4-year low at $1.50.

The stock tested that level in April 2017 and turned higher, supporting an uptrend to a 52-week high oof $3.60 in July. The stock fell in September, finding support at the 200-day EMA. It could bounce back to the third quarter high.

The company announced in September that Health Canada granted market authorization to formally transfer the Drug Identification Number (DIN) ownership of Belbuca (buprenorphine) buccal film in Canada to BDSI’s commercial partner, Purdue Pharma in Canada. This approval triggers a milestone payment to BDSI.

Belbua incorporates BDSI’s BioErodible MucoAdhesive (BEMA) drug delivery technology and is the only long-acting opioid that uses novel buccal film technology to deliver buprenorphine for appropriate patients living with chronic pain.

Belbuca was approved in Canada in June 2017 for the management of pain severe enough to require daily, continuous, long-term treatment and that is opioid-responsive and for which alternative options are inadequate.

4. Lightpath Technologies, Inc. (LPTH)

Source: Investopedia

Lightpath Technologies, Inc., a provider of optics, photonics and infrared solutions for the industrial, defense, telecommunications, testing and measurement, and medical industries, hit an all-time low at 30 cents in February of 2009 after a multi-year fall that began with the dot.com bubble in 2000.

The stock bounced to $3.67 a few months later, establishing a resistance level that lost in breakout attempts in 2010, 2013 and 2016.

An upturn in December 2016 hit another barrier in March 2017, giving way to a rounded base followed by an October breakout. The bullish price action opens the door to potentially rapid gains into 2006 resistance at $7.87.

Revenue for the first quarter of fiscal 2018 was approximately $7.6 million, an increase of approximately $2.6 million, or 51%, as compared to the same period of the prior fiscal year. The increase from the first quarter of the prior fiscal year is attributable to an approximately $3.1 million increase, or 579%, in revenues generated by infrared products.

Total cost as a percentage of revenue continues to decline, improving to 41% in the first quarter of fiscal 2018, compared to 49% in the first quarter last year.

Net income for fiscal 2018 first quarter was approximately $218,000, compared to approximately $140,000 for the first quarter of fiscal 2017.

5. Medical Transcription Billing Corp. (MTBC)

Source: Investopedia

Medical Transcription Billing Corp., a healthcare information technology company that provides a fully integrated suite of proprietary web-based solutions, together with related business services, to healthcare providers practicing in ambulatory care settings, went public in July 2014 at $5.00 and suffered an immediate downtrend that continued to the April 2017 all-time low at 29 cents.

The stock improved a few sessions later, topping out at $3.84 and falling into a broad basing pattern at the 200-day EMA.

The stock bounced off that level in early October, lifting to $5.44 and pulling back in a shallow trading range with support at $2.40. A breakout through the range top could build momentum buying interest that could lift the stock into the IPO print.

The company recently reaffirmed its 2017 revenue guidance of $31 million to $32 million, representing year-over-year revenue growth of approximately 30%. The recent signing of the largest client in the history positions MTBC for additional revenue growth in 2018.

During fourth quarter 2017, the company anticipates reporting record adjusted EBITDA in excess of $1 million for the quarter, together with continued improvement in GAAP net income and positive cash from operations.

6. Mannkind Corp. (MNKD)

Source: Investopedia

Mannkind, which focuses on the development and commercialization of inhaled therapeutic products for patients with diseases such as diabetes and pulmonary arterial hypertension, entered a shallow but persistent downtrend in 2004, posting a series of lower highs into 2015. Then the bottom dropped out, dumping the stock through 2012 support at $8.00 into a May 2017 all-time low at 67 cents.

The stock built a 3-month basing pattern above that price level and took off in a new uptrend that hit a 17-month high at $6.96 on October 10. The stock has since been pulling back and could reach strong support between $2.20 and $2.50, offering a low-risk trade entry ahead of a high bounce.

For the third quarter of 2017, net revenue for the company’s flagship Afrezza product grew 28% to $2 million, compared to the second quarter.

As of Sept. 30, 2017, the amount of Afrezza shipped to the wholesale and retail channels, but not yet recognized as revenue, was $3 million, an increase of $0.4 million from June 30, 2017.

For the nine months ended Sept. 30, 2017, total net revenue of $7.2 million was comprised of $4.7 million of Afrezza net sales, $1.7 million from the net sales of surplus bulk insulin to a third party, $0.6 million from the sale of certain oncology intellectual property, and $0.2 million from collaboration net revenue.

7. Kingold Jewelry, Inc. (KGJI)

Source: Investopedia

Kingold Jewelry, Inc., one of China’s leading designers and manufacturers of 24-karat gold jewelry, ornaments, and investment-oriented products, posted an all-time high of $11.95 in 2010, then fell into a decline that ended at 88 cents in 2011.

The stock broke that support level in the second half of 2015, falling to an all-time low at 49 cents, then turned higher in a recovery wave that remounted broken support. This launched March 2016 buying signals, delivering an advance to a 4-year high at $2.84 in August 2016.

The stock carved a higher low in March 2017 and is now testing multi-year resistance, with a breakout above the 2016 high favoring upside that could reach $7.00.

For the three months ended Sept. 30, 2017, the company sold a total of 30.1 metric tons of gold, of which branded production was 14.6 metric tons, representing 48.6% of total gold sold, and customized production was 15.5 metric tons, representing 51.4% of total gold sold in the third quarter of 2017.

In the third quarter of 2016, the company sold a total of 20.6 metric tons, of which branded production was 10 metric tons, or 48.3% of the total gold sold, and customized production was 10.6 metric tons, or 51.7% of total gold sold.

For the nine months ended Sept. 30, 2017, the company sold a total of 72.2 metric tons of gold, of which branded production was 34.7 metric tons, representing 48.1% of total gold sold, and customized production was 37.5 metric tons, representing 51.9% of total gold sold for the period.

In the nine months ended Sept. 30, 2016, the company sold a total of 55.7 metric tons, of which branded production was 28.6 metric tons, or 51.4% of the total gold sold, and customized production was 27.1 metric tons, or 48.6% of total gold sold.

8. Alaska Communications Systems Group, Inc. (ALSK)

Source: Investopedia

Alaska Communications Systems Group, Inc., a provider of advanced broadband and managed IT services for businesses and consumers in Alaska, topped out in the upper teens in 2007, then began a downtrend that found support near $5.00 in 2009. The stock then broke that low in 2011, falling into a test of the 2002 low near $1.50.

The stock then built a 5-year basing pattern at that level and is now trading near a 2-year high. Its 2015 resistance around $2.50 marks the final barrier, ahead of a rally that tests long-term range resistance at $3.90, which it posted in 2013.

The buying impulse could offer high percentage gains.

Total revenue for the third quarter increased to $56.7 million, up 0.4% from $56.5 million.

Total broadband revenue reached $31.3 million, representing 55.3% of total revenue and up 6.8% from $29.4 million.

Operating income for the quarter was $3.5 million, compared to $4.1 million.
Net income was $0.3 million in both periods.

Net cash provided by operating activities was $8.6 million for the third quarter, compared to $9.5 million.

Capital expenditures were $13.5 million for the quarter, compared to $8.7 million.

9. Limelight Networks, Inc. (LLNW)

Source: Investopedia

Limelight Networks, Inc., a digital content delivery provider, ended a decline at $1.75 in 2008, then bounced to $8.97 in 2010. It returned to support in 2011 before breaking down four years later, dropping to an all-time low at 90 cents in February 2016.

The stock remounted broken support after the presidential election, beginning an uptrend that has reached a 6-year high of $5.18. The October breakout above the June 2015 high of $4.43 will likely get tested in coming weeks, with a pullback as low as $3.50 offering a buying opportunity, ahead of a trend advance near the 2010 high around $9.00.

Revenue for the third quarter was $46.1 million, the highest in 19 quarters, up 17% year over year.

GAAP gross margin was 48.4%, the highest in company history.

Gross margin expanded by 730 basis points year over year. Cash gross margin of 58.9% was the highest since 2008.

Non-GAAP net income was $2.2 million, the highest third quarter since 2007.

Adjusted EBITDA was $7.4 million, the highest third quarter in company history.

10. Sierra Oncology, Inc. (SRRA)

Source: Investopedia

Sierra Oncology, Inc., a clinical stage drug development company focused on advancing next-generation DNA damage response therapeutics for the treatment of patients with cancer, went public near $29 in July 2015, then began a downtrend that continued through a June 2017 all-time low of $1.10.

The stock turned higher in July, hitting the 200-day EMA in October and breaking out shortly after, marking the first time in the stock’s public history it closed above this long-term barrier.

An extended testing period could follow, with pullbacks to new support between $1.75 and $2.00 offering low-risk buying opportunities, ahead of penetration into the unfilled June 2016 gap between $3.00 and $6.20.

For the three months ended Sept. 30, 2017, Sierra incurred a net loss of $10 million compared to a net loss of $15.2 million for the three months ended Sept. 30, 2016. For the nine months ended Sept. 30, 2017, Sierra incurred a net loss of $31.4 million compared to a net loss of $38.6 million for the nine months ended Sept. 30, 2016.

Cash and cash equivalents totaled $107.8 million as of Sept. 30, 2017, compared to $116.7 million as of June 30, 2017, and $109.0 million as of Dec. 31, 2016. The company believes that its existing cash and cash equivalents will be sufficient to fund current operating plans through approximately mid-2019.

On Sept. 30, 2017, there were 52,268,443 shares of common stock issued and outstanding, and stock options to purchase 7,685,449 shares of common stock issued and outstanding.

The November penny stock watch list provides a balance between junior biotech and depressed technology plays, with multi-week basing patterns offering low-risk buying opportunities for patient market players.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 8 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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Analysis

Traders Buying Activision Blizzard Options

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

With the S&P 500 having recovered most of its Christmas losses, there are still stocks that have not even started to move away from their lows. Today we are going to analyze one of those.

Activision Blizzard (NASDAQ: ATVI) is a US based company that produces and sells game consoles, PC and mobile gaming content. Headquartered in Santa Monica, CA, ATVI is one of the largest gaming and entertainment companies in the world. It was founded in 2008 after the Vivendi Games and Activision merger, and currently owns such brands as Call of Duty, Quake, and World of Warcraft, among others.

In the last 6 months of 2018 ATVI experienced its most negative period in history, having lost around 50%.

Fundamentally, this was sudden, as all quarterly reports exceeded expectations.

The chart shows revenue went down in early 2018, but this is okay given the seasonal factor, and Q4 is sure to yield nice profits to ATVI.

With the reports being so good, then, what made the stock plunge so much? First, the market went down overall, but there were some other reasons, too. One of them is the lower expectations on Q4 2018 earnings. They were first forecast at $3.06B, but in November, the company lowered them down to $3.04. Another reason was the news of fewer users in Q3.

Then, four top managers got fired, including the CEO and president, as they were unable to create a new game during 2018; this was followed by Michael Morhaime, the former Blizzard CEO, leaving the company. He stopped being president in October and became an adviser, but he will definitely have left by April 2019.

Done with firing? Not really. In February, someone let slip the company is getting ready for a massive job cut, firing over 100 employees, in order to reduce costs.

Breaking off with Bungie added fuel to the fire, with the stock plunging by 7%. Activision Blizzard and Bungie worked together on Destiny, but this did not prove fruitful. In November, Activision Blizzard provided Destiny 2 for free just to ramp up the number of users, which means the sales were not very good. At Bungie, however, people reacted positively, as they were very happy to get rid of the strict Activision Blizzard schedule.

For ATVI, however, this not only caused the stock to plunge, it may have also led to trials initiated by investors. A few companies are already considering legal action because of the loss of potential profits. All these negative reasons are still keeping the stock near its lows. The reasons are already priced in the market, though, as the news on legal actions were known in January, while the firing campaign may be good for the company.

In December, we mentioned General Motors (NYSE: GM), where the management decided to cut jobs, and the stock went finally up, forming an uptrend.

Once Activision Blizzard is able to reduce costs, this may happen to this company as well. The market is expecting a positive Q4 report, which may change investor sentiment, which is now negative.

The P/E is currently at 17.54, with the average being 18.91, which means the stock does have some potential.

With such a large stock fall, the short float is quite low, 2.23%, meaning there are few people who want to capitalize on the fall.

Another important factor that may signal a rise is the news on buying 16,000 call options at $46, with the expiry on Feb 15. Traders have to pay a premium in order to buy options, and the price must rise above the strike ($46 in this case) for them to get profits; this means the price is very much expected to rise above $46 by Friday.

Technically, there is a descending trend, with the price being below the 200-day SMA. Once the price approaches $45, however, the volumes go up, which shows the traders’ interest.

A good report may well push the stock above $50, but the price should stay there for a while before one could start taking midterm longs. The target may be at around $65 or $70.

Those who bought calls hoped for a good report, but the options will expire in a couple of days (or sooner), and this support will come to an end. In order to understand whether one should continue holding longs on ATVI, one should monitor the number of new users and management speeches. The rising number of users may change the current negative trend, and, in this case, even the legal actions won’t be a big deal.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 30 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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Stock Picks

Stock Pick: Foot Locker Inc. (FL)

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Foot Locker Inc. (FL) is an American retailer of apparel and shoes. The company operates 3,270 stores in 27 countries in North America, Europe, and Asia. These stores come in various formats, including Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, Runners Point, Sidestep, and SIX:02. As of January 2019, the company has 15,141 employees.

Technical Analysis of Foot Locker Inc. (FL)

We like FL because it is one of the few S&P 500 stocks that has gone through a major correction and is now showing signs of reversal. After printing an all-time high of $79.43 in December 2016, the stock showed signs of bullish exhaustion. The combination of bearish divergence and a double top pattern was enough to drive FL to as low as $28.42 in November 2017.

From that point, the stock bottomed out and started its reversal process. Over a year later, we believe that FL might have reversed its trend.

Technical analysis shows that FL has breached resistance of $52 in May 2018. This triggered the breakout from the inverse head and shoulders pattern on the weekly chart. While the stock pulled back and went below $52 in July 2018, the stock remained bullish. After all, it printed a higher low setup of $44.47 in October 2018.

With a higher low in place, FL once again took out resistance of $52 and climbed as high as $58.67 this month. Now, the stock is facing resistance at the 200 moving average on the weekly chart. The expected pullback will likely send FL down to $52 and flip the resistance into support.

Fundamental Analysis of Foot Locker Inc (FL)

In addition to our technical analysis, fundamental analysis also backs our bullish view.

The third-quarter 2018 performance of Foot Locker Inc. beat analyst estimates. Analysts projected that FL will print sales of $1,846 million yet the company generated total sales of $1,860 million. Also, analysts projected earnings per share of 92 cents. However, the company came out with surprising quarterly earnings of 95 cents per share.

Lastly, the trailing twelve months price-to-earnings ratio (PE ratio TTM) of FL is 12.85. The stock is undervalued considering that the PE ratio TTM of the apparel and shoes industry is 14.42. On the surface, the difference might not be significant. However, if you take into account that the four-year maximum of FL is 19.13, then it becomes more apparent that the stock has more room to grow.

The strategy is to be patient and buy on dips as close to $52 as possible. As long as bulls hold this level, FL will likely generate the momentum to bounce to our target of $72. Take that out and the next target is $78.

The timeline for the target is more than six months.

Weekly FL Chart


Monthly FL Chart

As of this writing, the Foot Locker Inc stock (FL) is trading at $56.68.

Summary of Strategy

Buy: On dips as close to $52 as possible.

Targets:  $72 and $78.

Stop: Close below $49.50.

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 328 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Analysis

High Risk, High Yield

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

After Donald Trump became President he told investors it was he who made the stock market rise. When the market went down, however, most blamed Trump again.

In 2018, the indices reached their highs and started correcting, which meant the ascending trend faded out and the market needed a new driver to start going up again. The US is taking on a new election in 2020, and until then Trump has to create that driver for the market in order to win it. And indeed, he does have a few silver bullets to support the national economy.

The Sino-US trade wars were unable to stop the market rise at once, but sped up the reach of the highs. With the ceasefire achieved, the market went positive, as the customs duties finally started spoiling companies’ earning reports.

The tech companies were the first to suffer. Thus, Apple reported iPhone sales declines, which according to Tim Cook, happened because of the trade war.

If the US-China relations improve in the nearest future, this will help the stock market to rise again – a good move for Donald Trump. While imposing duties was quite quick, lifting them will surely require a lot of time; this will push news on various agreements between the US and China into the market, and that will help  prices to start rallying again.

With the tech segment suffering most of all, it would be reasonable to assume its rising potential is also quite high.

Among the techs, Apple is of course in focus, as it’s a leading company here. Previously, iPhone sales decline could be explained with the trade wars, but now there’s also Qualcomm that, through legal actions, managed to ban selling iPhone products in China and Germany because of patent infringements. Apple, however, is still selling iPhones in China, even at risk that its representatives may get arrested. This is why Q1 report may fall behind the expectations, and the stock may get pushed down again. The price may fall to $140, and only positive news on Qualcomm claims may change the situation to the better.

Apart from Apple, the tech sector has a lot of companies, and each of them may react differently to the improving Sino-US relations. The corporations where most revenues come from China are first to win, of course.

One of such is Skyworks Solutions (NASDAQ: SWKS), which produces mobile network components. 83% of SWKS revenue comes from China. Its P/E is 9.70, while the average figure in the tech sector is 26.30, meaning Skyworks is very much underpriced. If the US and China come to an agreement, this company is very likely to increase its revenue and get investors’ attention. Ironically, the major risk is again Apple, as this company’s orders constitute around 40% of Skyworks revenue. If, however, Apple sales are able to start rising again, Skyworks will benefit from both factors.

Whenever the price breaks out of $70 and stays above, the price could rise further to $90.

Broadcom (NASDAQ: AVGO) has over 54% of the revenue coming from China. It is an integration microchip producer that is among top 20 semiconductor selling companies. It’s P/E is 12.60%, slightly higher than that of Skyworks Solutions, but still far behind the 26.30 average.

Broadcom also depends from Apple’s orders, but its share is just 20%, so the risks are lower. Still, a slight decline in revenues is expected in Q1.

Broadcom’s outlook is overall better than that of Skyworks. Technically, the price is above the 200-day SMA, and there’s an uptrend forming. When the entire market was falling at Xmas, Broadcom barely reacted, which signals the positive investor sentiment.

Once the price goes above $270, the stock may then rise to $300.

One of the most underpriced tech companies is Micron (NASDAQ: MU), another semiconductor producer that mainly makes RAM modules, SSD drives and CMOS detectors.

It’s ‘Chinese’ share is 51%, while the P/E is at 2.90, compared to 26.30 average. Over the last six months, the earnings reports showed the highest revenue, while the stock price was going down, just because of the RAM and flash drive supply and demand imbalance. The market is still oversupplied with these devices, and Micron is expected to lose revenues for the following two quarters as well. In Q4 2018, the earnings already fell by 6% QoQ.

Considering the above, Micron decided to increase its production by only 15% instead of 20%, as planned before, which will allow it to decrease the supply. Samsung is also planning to decrease its memory card production in order to slow down the price fall. By Q3 2019, the demand for memory devices is expected to rise again, and the price should recover.

The financial market is all about expectations, and, in this case, the decrease of memory devices demand is already priced, this is why Micron stock have fallen by 50% for the last six months. The current price may prove to be the best for going long.

When $34 got broken out, the volume increased sharply, which is the first sign of the reversal. The stock is currently trading above $36, and in case it stays there, it may go as high as $50 per share.

Each of the above companies is facing some issues, which are bound to get resolved sooner or later. Still, all of them have the same problem: the Sino-US trade war that prevents them for recovering and rising. Once the relations between the two countries get better, the game is sure to change a lot.

The key risk factor here is Donald Trump being very unpredictable. However, the potential yield is quite high, too.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 30 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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