July 7th, 2009
When the market’s trend turns back up again, which industry group will lead? Well, if you read or hear many of the “talking heads”, the near unanimous, uproarious answer seems to center on tech and, more specifically, the semiconductor industry.
Most of us who’ve been in the market for a while know that the industry’s performance has been anything by lackluster since the Tech Bubble Crash of 2000-2003. For example, INTC (Intel), one of the icon of that period, is still just 25% of its value nine years ago; the same for TXN (Texas Instruments; BRCM (Broadcom) is only 14% of its value then.
With each recovery since – in 2003 and 2005 and, now, 2009 – the hope lands again on the semiconductor industry. But how has the sector recently performed history. One way to measure their performance is to look at the industries’ ranking among the 197 IBD Industry Groups:
What these graphs show the performance of the three industries relative all the others. What you see is that the groups remained at the top for only a few months before other groups started displacing them in their top ranking. But if you were to look at the charts of individual stocks, you’d see that most have much repair work left. There are over 170 stocks in the three groups combined. So which look most likely to deliver extended moves and significant percentage appreciation. There’s many to pick from but here are a few that I’d take a flier on:
- VSEA (Varian Semi)
- LRCX (Lam Research)
- FORM (Formfactor)
- ASMI (ASM International)
- NVDA (NVDIA)
- ASML (ASML)
- TRID (Trident)
- DSPG (Dsp Group)
- MU (Micron)
Only my humble opinion but these are the stocks I’m going to be focusing on when the next upleg begins.