Minyanville's Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. Here he answers a reader's burning question about "green" stocks. For more original thought, visit www.minyanville.com.
Professor Udall,
Do you have any opinions on Zoltek Companies, Inc. (NASDAQ: ZOLT)? My wife wants me to buy everything "green". Her last "green" company idea was General Electric (NYSE: GE). I know, right? I bought a little just to quiet the noise level. I'm into a little SunPower(NASDAQ: SPWR) and Evergreen Solar (NASDAQ: ESLR). Does Zoltek have legs?
Thanks,
Minyan L.
Minyan L.,
First, that's hysterical. Second, a word of caution: Going all green, or all of any one thing, is something I'd never advocate. If you do, you do so at your own risk, as nothing in the market is ever as obvious as it seems, especially when it seems totally obvious.
The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist. That is not the case, and one growth company worth reviewing is Cypress Semiconductor.
Cypress Semiconductor (NYSE: CY) is a manufacturer of high-performance integrated circuits, memory chips and silicon solar cells.
Analysts really like Cypress' revenue growth prospects of 23-25% following a likely 45-50% increase in 2007.
Analysts also like Cypress' recent acquisition of PowerLight Corp. and expect the purchase to drive a significant earnings increase. CY's SunPower business is another plus, due to its potential growth and undervalued status.
Cypress Semiconductor Corporation (NYSE: CY) stock is falling this morning after an analyst at Credit Suisse downgradedSunPower Corp. (NASDAQ: SPWR), in which CY has invested, to "Neutral" from "Outperform." There are also analyst comments out there today about CY that could be hurting the stock. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CY.
After hitting a one-year low of $16.72 last January, the stock hit a one-year high of $42.79 in November. This morning, CY opened at $26.23. So far today the stock has hit a low of $24.68 and a high of $26.23. As of 11:05, CY is trading at $25.30, down $1.41 (-5.3%). The chart for CY looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider a March bear-call credit spread above the $40 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 4.2% return in 2 months as long as CY is below $40 at March expiration. Cypress would have to rise by more than 21% before we would start to lose money.
CY hasn't been above $40 for more than a few day at a time in the past year and has shown resistance around $30 recently. This trade could be risky if the company's earnings next week impress investors, but even if that happens, this position could be protected by resistance CY might find around $40, where the stock topped out twice since October.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in CY or SPWR.
Hot Tech Growth Companies Four of the top 10 companies in BusinessWeek's annual Hot Tech Growth 75 are involved in the manufacture of semiconductors. What's behind their banner year? Leading the list in 2007 is Google, AT&T and Apple followed by Cypress Semiconductor, Western Digital, Nvidia and MEMC Electronic Materials. Hot Growth: The Chips Have It
America's Greediest Cities Forbes takes a look at which cities are home to the richest people in America over the past decade. There are 751 Forbes 400 members in their 10-year tally. Of that number, 608 live in the 50 major metropolitan areas they used to compile this list. They divided the number in each city by that city's population to come up with Forbes 400 members per capita and then ranked that list. Some of the results are surprising. Reputed bastions of hedonism like New York and Los Angeles, for all the glamorous myths they generate, came in sixth and eighth, respectively. Topping the list is Silicon Valley capital San Jose followed by San Francisco, Seattle, Denver and Boston. America's Greediest Cities - Forbes.com In Pictures: America's Greediest Cities
Last week we spoke about data storage giant EMC Corp. (NYSE:EMC) being way undervalued, based on its core business plus its holding in VMWare (NYSE:VMW). Today, I'd like to focus on another stock that appears to be trading at a big discount to actual value.
Cypress Semiconductor (NYSE:CY), a chip company, trades with a market cap of about $6.3 billion, and has shown decent revenue growth. It holds a 53% share in Sunpower Corp. (NASDAQ:SPWR), which makes solar panels and cells. Sunpower has been flying ever since its IPO, and currently trades at a market cap of $13.2 billion. This makes Cypress's share in Sunpower around $6.9 billion. I am aware that in situations like this the parent company will rarely trade based on the full value of its holdings, but this is a bit silly. It's not like Cypress's core business stinks.
"Assuming we do not encounter any major macroeconomic disruptions, we are well-positioned to sustain substantial revenue gains into 2008," Cypress CEO T. J. Rodgers said. This doesn't sound like a business that is being valued at negative $600 million (approx.).
Yesterday, Credit Suisse analyst John Pitzer noted that Cypress alone is worth somewhere around $2 billion. In a perfect world that should give Cypress a market cap near $9 billion. Again, I understand that we don't live in a perfect world, but at a 40% discount, Cypress looks like a nice, cheap play.
Disclosure: Writer holds stock in EMC. Writer has clients who own CY, but does not own it personally. He holds no position in any other stock mentioned as of 11/8/07.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com.
Changes Coming for the AMT? Congress Better Act Fast
If lawmakers want to protect tens of millions of taxpayers from the Alternative Minimum Tax, they'd best make it snappy. If Congress does not act in the next two weeks or so, 25 million to 50 million taxpayers will see the processing of their returns and their refunds delayed, the IRS said Tuesday.
Most Trusted Brands in the World That You Haven't Heard Of
Sure Coca-Cola, Nestle and Nokia loom large in every market in the world. But that doesn't mean they can't be beat. But when it comes to trust, customers still think local. What is the most respected brand in India, China, Russia, Brazil and more? Check out the top brands around the world in various countries.
These high-quality winners have the wind behind their sail. At first glance this sure looks like a high-quality group. But, as always, take a close look before you throw a bounce pass in the direction of any of these stocks. They include Coca-Cola, ExxonMobil, McDonald's, Wrigley and Cypress Semiconductor.
Spooked by the possibility of identity theft, increasing numbers of people are taking a radical approach to thwart criminals: They are putting their credit reports on permanent freeze. Before you put a lock on yours here is what you need to consider.
Looking to Buy or Sell a Mutual Fund in Weeks Ahead? Tread Very Carefully
Many mutual funds are estimating that they'll make big taxable distributions to shareholders this year, and that means investors planning to buy or sell fund shares in the weeks ahead should tread carefully.
Everyone knows the secret to investment success is to buy low and sell high. The problem is most of us lack clairvoyance. There are never any guarantees when investing, but avoiding these 10 missteps will better your chances of success.
Time is money, the old adage goes. If you consider yourself a busy person, you probably don't feel that you have enough time to do everything that you want. Here are six ways to help you find an extra hour or two in your busy day. They include combining tasks, reworking your commute and reducing your television watching to name a few. 6 Ways to Wring Extra Time From Your Day - TheStreet.com
World's Spookiest Spots
If you're looking for ghosts and ghouls this month, chances are you'll get a better fright in Romania than you will trick-or-treating down Elm Street.
Tips to Help as Grocery Stores Gobble More of Your Wallet Over the past year many of the grocery store staples have risen sharply. The average price of milk is up about 21% in the last year, and orange juice is squeezing budgets about 31% more. Bread is up 13%, eggs 24% and beef has risen 11%. What's a shopper to do? Here are ten tips that can help you slash that fast-rising food bill. Consumers eating higher food costs - USATODAY.com
10 Things You Can Do to Save Hundreds on Energy Costs You want to save money as well as do your part to combat global warming. But what's the best way to get started? This Consumer Reports special report includes the results from testing and advice from experts on the products and programs that work to save energy and those that promise more than they deliver. ConsumerReports.org - Saving on energy costs: Tips, Reducing your carbon footprint
Top Tech Stocks to Buy in Today's Uncertain Market These five companies should continue to produce solid gains in troubled times. They include Apple, Intel, Broadcom, Cypress Semiconductor and Applied Materials. Time to Love Tech Again? - Kiplinger.com
Best Cordless Phones Cordless phones are adapting to a world increasingly crowded with wireless and Internet-based devices. New phones can easily coexist with home networks or let you place calls over your cell-phone service or the Internet. See which phones rate the best and which ones are the best value for the money. ConsumerReports.org - Cordless phones: Recommendations, Ratings
Luxury Goes Mass Market Call it the age of McLuxury. The $220 billion global industry is racing to the top and the bottom at the same time. But can the world's most exclusive brands stretch that much and still keep their cachet? Fortune luxury special: Mass vs. class - Sep. 5, 2007
In July, Cypress Semiconductor Corp. (NYSE: CY) posted record 2Q 2007 revenue. At $372.8 million for the quarter, up 8.7% from 1Q 2007, 2Q revenue surpassed the previous record revenue set in 4Q 2000 at the height of the dot-com boom. (Ah, those were the days.) Diluted EPS were $2.29 as compared with 1Q 2007 diluted EPS of a loss of $0.01. But let's examine that EPS figure. During 2Q, Cypress sold 7.5 million shares of its wholly owned subsidiary Sun Power. Cypress still has a $3 billion stake in Sun Power. Excluding the proceeds from this stock sale, diluted EPS is $0.16, much less but still much better than a loss. CEO T. J. Rodgers bragged on these results, noting that Cypress Semiconductor has survived when 47 of its competitors since 1982 have not.
Rodgers stated that demand for semiconductor products increased for the seventh quarter in a row, and he sees no slow down. Cypress is expanding its line of proprietary products, including PSoC (programmable solution on chip) models that offer touch-screen capabilities for cell phones, video gaming, and point-of-sale registers. Touch-screen capability is the wave of the future, as is HB-LED (high brightness light emitting diode) for all types of HD TVs, cell phones, and lighting products. Cypress forecasts HB-LED to be a $10 billion market annually within the next three years, much of which will rely on Cypress products. Cypress is also in the forefront of mobile communication devices, offering a peripheral handset controller that downloads music to cell phones ten times faster than previously. Cypress is also developing next generation high-speed holographic (3D) data storage systems.
We blogged late last fall about semiconductor stocks fundamentals rolling over. It appears semi management is beginning to whisper more and more of moderating results to analysts:
Lehman cuts Micron Technology Inc's (NYSE: MU) estimates and sees losses for the next three quarters. The increase in demand for memory chips due to Microsoft Corporation's (NASDAQ: MSFT) Vista demanding more memory is not happening.
Pacific Crest Securities wrote second quarter chip demand is underwhelming, with notebooks and the Nintendo (OTC: NTDOY) Wii the only bright spots.
J.P. Morgan wrote consensus expectations for both the second quarter and all of 2007 are too high and is trimming estimates, The more significant earnings misses could come from Advanced Micro Devices Inc (NYSE: AMD), Cypress Semiconductor Corporation (NYSE: CY), Intel Corporation (NASDAQ: INTC) and On Semiconductor Corporation (NASDAQ: ONNN); with smaller cuts for Texas Instrments Inc (NYSE: TXN), Broadcom Corporation (NASDAQ: BRCM), Altera Corporation (NASDAQ: ALTR), Xilinx Inc (NASDAQ: XLNX) and Fairchild Semiconductor International (NYSE: FCS).
We began blogging about a slowdown in semiconductor stocks in November. However, most of this slowdown could be coming to an end. It appears from both National Semiconductor Corporation (NYSE: NSM) and Texas Instruments recent earnings releases that both companies are seeing the industry downturn ending as inventories have been worked down and backlog is beginning to build again.
The other major points we have been making is that we are entering the seasonally weak period for these stocks. So be cautious about jumping in with both feet in the early Spring.
Most likely, the two drivers for these stocks is the Fed lowering rates or the typically seasonal pick up which occurs in late summer. Since the Fed is on hold, there appears to be no need to jump into these stocks yet. Let the bad news hit these stocks and then start bottom fishing.
Companies start to believe their own PR hype. Investors push a stock past logical limits. A company seems about to break down or break out. These are just a few things that can signal a stock with attitude. And... that attitude can be good or bad for the stock price, since attitude always catches up with reality. At least on Wall Street, that is.
Broadcom Corp. (NASDAQ:BRCM) was up $0.35 (+1.13%) Friday to close at $31.42 on just lower than average volume ahead of a late breaking story. A federal jury in San Diego found the company had not infringed on two patents for digital video compression owned by rival Qualcomm Inc. (NASDAQ: QCOM). Qualcomm was down $0.65 (-1.70%) to $37.51 in Friday trading. The technicals for BRCM have been negative for a while but a recent stock price pop may signal an improvement. Currently the company has an S&P 2 STAR avoid rating. Out of the 22 other analysts who cover the stock, nine give it a strong buy, four a moderate buy, seven a hold, one a moderate sell, and one disconnected analyst gives the stock a strong sell. I wouldn't be surprised if some upgrades are announced in the coming hours and days.
It looks like Intel (NASDAQ:INTC) has achieved another breakthrough in the semiconductor sector.
According to a report in The New York Times, a new microprocessor that Intel plans to introduce uses a new insulator that leaks less current near transistors, reducing power consumption, while at the same time enabling improved processing speed/performance.
They're called 45-nanometer generation chips -- a project more than ten years in the making -- and it will help Intel reassert itself against competitors in the low-power chip segment. In its pursuit of speed, Intel had fallen behind competitors in that dimension of chips, who were shifting to low-power alternatives.
Intel's here-to-fore emphasis on processing speed is understandable; it could be argued that, along with Microsoft's (NASDAQ:MSFT) Windows breakthrough, Intel's semiconductor advances are the two engines that helped propel the impressive increases in worker productivity that have characterized the Digital Age since the early 1990s.
Further, recently Intel has been pressured by lower-cost competitors Advanced Micro Devices (NYSE:AMD), Texas Instruments (NYSE:TXN), and Samsung Electronics (OTC:SSNLF), with the latter grabbing the No.1 flash memory spot from Intel.
Wall Street has duly noted these inroads by Intel's competitors, and Intel's stock -- while it has not plummeted, has languished between $17 and $23 over the past year, after a sharp down-off from $28 in late 2005. Intel's shares closed Friday at $20.53, down 7 cents.
However, if Intel's new 45-nanometer chips perform as well as the company hopes, Intel's stock may start racing ahead as well, along with the performance of PCs, laptops, and other digital devices.
Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.
U.S. stocks closed mixed Tuesday, as investors began to focus on earnings. Also, U.S. Federal Reserve Chairman Ben Bernanke's U.S. Congressional testimony is scheduled for Thursday. The Dow closed up 0.21%, NASDAQ 100 down 0.20%, S&P 500 up 0.08%, and the 10-year bond declined to 4.751%. Volatility Index S&P 500 Options-VIX gained 0.66 to 10.66.
Cypress Semi (NYSE: CY) said on 10/6/06 "we have been exploring ways in which to more fully realize the value of our investment in SPWR for the benefit of our stockholders. We have expanded the scope of our review to include a variety of strategic alternatives." CY is expected to report EPS on January 25. UBS Investment said: "We expect consolidated SPWR results to also continue benefiting the company's top line as that company rapidly ramps its new production capacity." CY February option implied volatility of 37 is near its 26-week average, according to Track Data, suggesting non-directional price fluctuations.
If you're up for a modest risk in a very smart young semiconductor company, Simtek Corp. (OTC: SMTE) might be a good bet for you, one with some real upside. I see a double your money here!
So far SMTE has yet to turn a profit, but management expects the fourth quarter results to be quite strong, and enough to put the company into profitability for the first time.
I think this is the time to get in with this company. The numbers have been steadily improving, with the third quarter 2006 results at 242% above the third quarter of 2005, and the net losses steadily diminishing. Cypress Semiconductor Corp. (NYSE:CY), one of the leading semiconductor companies in the industry, has taken a strong position on SMTE, and clearly it believes Simtek's products have real potential. It's products are currently being used in the U.S. Military Apache helicopters, Ricoh copiers, and prosthetic limbs, among other items).
I think this company could be growing at a 50% clip over the next few years. The company has applied for a NASDAQ listing, which will give the stock a much higher profile, and can only help the price. If you can take a slight risk, I think this one could make you a lot of money.
Type of stock: A relatively young semiconductor company that is on the verge of breaking out.
Price target: As long as this stock is below $5, I think it's worth picking up and holding for at least a year or two -- this is a double to $10.
Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.
MOST NOTEWORTHY: Today's notable initiations include NetFlix (NFLX) and Diamond Foods (DMND):
Bank of America started NetFlix Inc. (NASDAQ:NFLX) with a Sell rating and $24 target, as they expect increasing subscriber acquisition costs and decreasing average revenue per subscriber to be challenging for the long-term;
Diamond Foods Inc. (NASDAQ:DMND) was initiated with a Buy rating and $23 target at Oppenheimer, as the firm believes Diamond Foods has a solid core business and sees healthy growth with the Emerald products division.
OTHER INITIATIONS:
JB Hunt Transort Services Inc. (NASDAQ:JBHT) was initiated with a Hold rating at McDonald.
Duke Energy Corp. Holding Co. (NYSE:DUK) was initiated with a Hold rating and $35 target at Deutsche Bank, citing valuation.
JP Morgan initiated shares of International Coal Group Inc. (NYSE:ICO) with an Underweight rating, citing difficult business conditions for Central Appalachian coal miners.
Rochdale initiated Cypress Semiconductor Inc. (NYSE:CY) with a Buy rating and $21 target; the firm believes new business, operating efficiencies and the SunPower (SPWR) investment will improve profitability in 2007.
To sell or not to sell? That has been the big question for the CEO of Cypress Semiconductor (NYSE: CY). During the past few weeks, it looked like the CEO wanted to sell out.
Of course, it was something shareholders did not want to hear. The stock price is down about 10% to $17.
Interestingly enough, the company also reported its third quarter results – which were strong. But it looks like there was a lot of buyout speculation baked into the stock.
The crown jewel of the company is SunPower, which is benefiting from the growth in solar power systems. In fact, Cypress is still considering alternatives for this asset. Perhaps a sale?
Maybe. Or maybe not.
Recently, there has been quite a few buyout rumors. But, as is the case with Cypress, these rumors are usually nothing more than rumors – which turn out to be fairly unhealthy for your portfolio.
Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.
Minyanville's Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. Here he answers a reader's burning question about "green" stocks. For more original thought, visit www.minyanville.com.
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If you're up for a modest risk in a very smart young semiconductor company, Simtek Corp. (OTC: SMTE) might be a good bet for you, one with some real upside. I see a double your money here! 
To sell or not to sell? That has been the big question for the CEO of 
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