Is TriQuint's CEO Telling You to Buy?
Famed money manager Peter Lynch told us executives can sell their stock for any reason, but typically buy only for one: They think the price is going to go up!
Today, I'm highlighting mobile chipmaker TriQuint Semiconductor (NAS: TQNT) , which saw its president and CEO buy nearly $100,000 worth of stock the other day. These aren't option grants, either, but purchases made on the open market just like you and me.
TriQuint Semiconductor snapshot
1-Year Stock Return
Return on Investment
Estimated 5-Year EPS Growth
Dividend and Yield
Ralph Quinsey, president and CEO
CAPS Rating (out of 5)
Source: FinViz.com. N/A = not applicable, TriQuint doesn't pay a dividend. TTM = trailing 12 months.
Although following the lead of insiders can be profitable, I still recommend you do further due diligence to determine whether this stock would make a good addition to your own portfolio. So, this isn't a call to buy, but just the inside track on a company you might want to check out further.
It's all fun and games
It used to be that just the mere presence inside an Apple (NAS: AAPL) product meant your stock was guaranteed to rocket higher. And while some players still seem to respond in such a fashion -- shares of Cirrus Logic (NAS: CRUS) have surged 130% over the past year -- lately it seems companies also need to guide to stratospheric gains in the quarters head to elicit any sort of notable reaction. Otherwise, shares plunge or, at best, plod along.
Shares of AvagoTechnologies are barely above where they traded last year; Skyworks Solutions are up 8% year over year but were pummeled just before the iPhone 5's launch last month -- they lost 18% in one day -- after projecting only 8% revenue growth going forward; and Broadcom is down 13% from where it was in 2011. OmniVision Technologies has ridden a roller coaster as its image sensors have been included, then jettisoned, then included again.
Perhaps the Apple halo effect doesn't extend very far anymore. Despite retaining a position inside the iPad and finding a coveted spot in the iPhone 5, TriQuint Semiconductor hasn't been able to translate such gains into growth. Its stock is off 40% from its 52-week highs, and it fell 13% just the other day after beating analyst third-quarter estimates but offering up weak fourth-quarter earnings guidance of just $0.01 to $0.03 per share, significantly lower than the analyst consensus of $0.06 a stub.
Part of TriQuint's problems stem from having to forego some of the business it could have had because it couldn't keep up with demand, and when customers held off buying iPhones ahead of the latest iteration's launch, the chipmaker's sales tumbled 22% and it recorded a rare loss.
Sales of the iPhone are all over the place these days, but one Morgan Stanley analyst says that if you include the partnerships with Chinese carriers China Unicom and China Telecom -- and if it can bring China Mobile on board, too -- Apple could sell as many as 200 million units or more. Consider that Wall Street figures TriQuint will ring up $1.40 per each handset sold based on the content contained in them, and the chipmaker will be recording some significant change from its inclusion.
And Apple's not its only partner, either, as Samsung is included in the roster, and its Android-based products have been racking up sales as well. Not only will we likely see TriQuint's guidance adjusted higher as the year progresses, but we should expect to see its stock adjusted, too. The purchase by its CEO may just be an indication that the stock is much too low for the promise that's built into the company.
I previously rated TriQuint SemiConductor to outperform the broad market averages on Motley Fool CAPS, the 180,000 member-driven investor community that transforms informed opinion into stock ratings of one to five stars. The stock has fallen almost 20% since I weighed in on it back in May compared to a 5% gain in the S&P 500, giving me a losing score so far. But with TriQuint's four-star rating (out of five), it seems like more than a few investors concur that the chipmaker has a lot of opportunity to grow further.
But tell me in the comments box below whether you disagree with my assessment of TriQuint Semiconductor's chances for hitting it big.
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The article Is TriQuint's CEO Telling You to Buy? originally appeared on Fool.com.Fool contributor Rich Duprey owns shares of Apple. The Motley Fool owns shares of Apple, China Mobile, Cirrus Logic, and TriQuint Semiconductor. Motley Fool newsletter services recommend Apple. 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.