Can These Stocks Bounce Back?
However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.
There are 261 stocks listed under "electronics" in the CAPS' screener, but more than a handful of them carry well-respected four- and five-star ratings. Those accolades mean our 180,000 CAPS members are confident that these stocks will beat the market in the months ahead, but let's see what members are saying about the ones below:
CAPS Rating Today
52-Week Price Change
Est. 5-Year Growth Rate
|Corning (NYS: GLW)|
|Silicon Image (NAS: SIMG)|
|Silicon Motion Technology (NAS: SIMO)|
Source: Motley Fool CAPS; Yahoo! Finance.
Until yesterday, the markets were on a straight ride down, flirting with their worst skein in three decades. But with the S&P 500 still up over 12% over last year, it might be surprising to learn the CAPS electronics stocks have done appreciably worse, rising under 9% in that same time span. So let's take a closer look at why investors think some of these other companies won't be jumping from the frying pan into the fire now that the markets are roiled again.
Some spring in its step
You might remember the Christmas debacle experienced by Best Buy (NYS: BBY) , where it had planned for a huge uptake in next generation 3-D and Internet-ready televisions only to find that consumer demand wasn't there. The consumer electronics giant still hasn't recovered from the lump of coal it got in its stocking.
Analysts might want to revisit their forecasts for an eventual uptake of those technologies after Corning's earnings suggested LCD TV growth will come in at just 10% this year, down from previous forecasts of 16%.
But don't count Corning out yet. Telecom giant Verzion (NYS: VZ) is buying up as much of Corning's fiber optic cable as it can get its hands on, with orders running about 20% higher than what it had anticipated. That segment saw revenues jump 24% year over year for Corning, accounting for more than a quarter of its total revenues.
They are creating conditions to take advantage of China's appetite for TV's, Tablet P.C.'s, as well as mobile phones. All of these products have been touted to use Gorilla glass. Furthermore, the current markets that Corning has established provide arguments for continued revenue streams at levels that give a P/E well below 10
Let us know on the Corning CAPS page if you plan on tuning in to this growth story.
You gotta love the way Silicon Image continues to scoff at analyst estimates. Last quarter, the HD display component maker saw its mobile device segment register 50% growth representing 17% of product revenues. This quarter mobile revenues surged from $1.8 million to almost $17 million, though it was tempered by declines in consumer electronics and PCs.
Silicon Image helped create the ubiquitous HDMI standard, and with the proliferation of mobile computing devices, it's looking to advance a new standard, MHL, which has been a big reason for the growth in mobile revenues. MHL licensing revenues in the second quarter surged 85%.
As it turns out, maybe the analyst that said Silicon Image was overvalued had it right all along, as its stock has dropped by a third since then. It's up 12% on its recent earnings beat, and 98% of the CAPS All-Stars rating the components maker think it will continue to do so.
Let us know on the Silicon Image CAPS page if this is a stock that can still make a connection with higher growth.
Putting the ball in motion
The explosion of the mobile Internet is also connecting smartphones, digital cameras, PCs, and tablets with Silicon Motion Technology, which makes high-performance, low-power chips for multimedia consumer-electronics products. Mobile storage products -- controllers for NAND flash devices such as memory cards and USB drives -- as well as SSD controllers and embedded flash controllers, increased 9% sequentially last quarter.
The storage specialist changed its strategy by selling directly to OEMs, and sales increased 40% from the previous quarter, accounting for about half of all mobile storage sales. Importantly, it's enjoying rising prices for its controllers while memory cards from the likes of Micron Technology (NYS: MU) are seeing prices drop.
While the rollout of its 4G LTE transceivers for Samsung handsets also had some astounding growth (up 55% sequentially), the big earnings miss by MetroPCS (NYS: PCS) should temper some of the enthusiasm. The carrier hasn't been able to translate smartphone sales into new customers as smoothly as it wanted.
CAPS member Winnerfrommidlan isn't too concerned since SiMo's controllers are in the iPad, which has been flying off the shelves. Keep track of the chip maker's developments by adding the stock to your watchlist.
The ball's in your court
There are many factors that go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Head over to CAPS today and share your thoughts with other investor analysts on whether you think these stocks are ready to bound higher.
At the time this article was published The Motley Fool owns shares of Best Buy. Motley Fool newsletter services have recommended buying shares of Best Buy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Fool contributor Rich Duprey owns shares of Best Buy but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here.
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