Advanced Micro Devices (AMD)

Intel is too good. AMD is too speculative. It rarely has a positive ROIC, curerntly a weak 6%. Intel has more than double the ROIC.

This is effectively a processing company. In terms of the biggest boss on the street, it would be Intel, and this would be considered the baby in the corner. All the semis are up this year. When you get a cyclical decline in the semi space, and we are long overdue on one of those, that is when you want to buy this. He would just wait now.

(A Top Pick May 4/17. Up 19%.) Basically, the stock was bought at $10.23 and he Sold a Call option on it. That money comes to you immediately, so he’s reduced his cost of the stock to $8.40. This got Called away on Oct 10.

Hasn’t been one of the leaders in a fiery, hot area in the semiconductor space. He would rather own something like Taiwan Semiconductor (TSM-N) or Applied Materials (AMAT-Q) which has dropped down in the last little while. The valuations are not great compared to some of the other names. He would look to other spaces.

A play on chips, Apple devices and hopefully they get into more autonomous vehicles. In the last 3 days, it has dropped about 25%-30%. Morgan Stanley reduced their rating on the company, but Morningstar increased their rating. He thinks you are okay continuing to Hold and see what the next couple of quarters brings.

It is tough to not like on what they have done in one year. Semis have been phenomenal, and this company has been right in there. It has consolidated more in the last little while. He got a little more cautious on tech a number of months ago, when it started to break down on the relative. However, semis have really come on and the numbers are looking okay. He would have a hard time arguing against this one. However, the valuation is tough, which is what would trip him up. He would prefer an ETF that replicates the stocks, and give you a basket approach.

He would want to buy pullbacks to the $10 area. We made a good test in May. A pullback to that level would indicate a buying opportunity.

This was one of his major Shorts at the start of the year and he is not doing well on it. Thinks it has come too far, too fast. It’s a competitive world out there with their components. Historically this has been a volatile stock. He would be cautious on this and not take a new position.

Probably the poor cousin of Nvidia (NVDA-Q) right now. While they have a chip coming that is comparable, there is a difference between having great ideas and running the business, whereas Nvidia has been able to do both. This company has had difficulty in running their business. They haven’t been growing their cash flow and it hasn’t been generating positive cash flows, so they have been sinking a lot of money into CapX and R&D. Looking at their past, they still haven’t proven that they are able to get all their ducks in a row, so they can keep moving forward.

All tech stocks have run up substantially, and are starting to run out of steam. They’ve run up because of optimism about China as well as the opportunity to repatriate capital off the back of Trump’s regime. You might want to wait and see what happens. Typically, semiconductor stocks are about 3 years in length, and we are about 5 years in this one.

This has fallen about 25% since it reported earnings. They had a couple of new lines of chips with a couple of new ones and lots of hype on. They’ve been tested and are not any better than Intel chips, some saying not quite as good. The company took a big hit on that, and is probably at a point where you are going to see some support. This is purely an option play. The option premiums have expanded dramatically because the stock sold off. A very good Covered Write in his opinion. If the stock does not get called away, you can do it again 6 months from now.

One of two with graphics processing. AMD-Q has been focusing on the wrong things however. The new president is trying to turn things around. He cannot buy it for clients, although there are lots of opportunities for growth.

Chip Maker. You need to look at it as the inputs to secular growth trends like virtual reality, drones, and many others. You need to be careful of international trade policy revisions. You may prefer Intel as safer and get a half position in that as well.

In the hardware group in technology, Cisco (CSCO-Q) is one of the key names he is taking a close look at. AMD and a number of the semiconductors have had a monstrous run and valuations just aren’t there for an entry point.

Advanced Micro Devices (AMD-Q) or Intel (INTC-Q)? Neither of these would be his pick for a US stock. Intel is probably the better of the 2. This one is a little more challenged because it is such a small player in that market. Cisco (CSCO-Q) looks better. It is a CapX company, and there has been a CapX starvation globally. It is positioned at about 12.5X earnings and the earnings growth over the next 2-3 years looks to be about 13%-15%.