Intel (INTC)

Not an expensive stock, trades at 14x earnings. Moving out of PC business to the smart phone business which has been difficult for them.

If you look at the whole semiconductor sector, it really matches with the global growth themes. Global growth and chips really go hand-in-hand. Has come off a bit this year, but is kind of coming back to trend. It could get a little bit softer. As a safer entry point, he would like to see it at around $29. Thinks there is a 5%-7% risk from here. A little bit early to get in at this point, so just wait a few percents.

Thinks they will continue to struggle. The major product they are selling into is still the big mother load of computer chips for computers. Arm Holdings (ARMH-Q) have been eating their lunch. Computer sales are way down. It looked like they were making good inroads into the tablets and phone markets, but it turns out they were actually subsidizing a lot of those sales.

He likes big tech because it is a big cash flow generator and can be a big dividend grower. Their problem has been that they are so centric to PCs. They made an acquisition to help them with networking and data centers. Semiconductor companies are seeing strategic value in paying a premium to market. Private investors can buy at market value today yet acquirers are paying a premium. It is not quite as aggressive a position as some, but you make good money.

Made a very big acquisition of Altera, and thinks this is why the stock is under pressure. They have to flush out a little bit more and explain what they have done. A very interesting, but a very big acquisition. Feels the stock is going to be under probation for a while and will be going sideways for about 6 months.

His model price is $52.98, almost a 60% upside. The old techs are not being properly valued in this market. The fundamentals are there for this one to go significantly higher in the next little while. Dividend yield of 2.91%.

It is a bit of a laggard. He thinks it rallies from here and makes a new high. The sector is positive. It outperformed in 2014 and that was important, but now it is underperforming. If the index is going to go higher, then money has to go into this stock as it is a big component of the index.

Great company, a pioneer of the Internet. Gets fairly seen as a one trick pony. Prefers QCOM-O. But INTC-O is not a bad company.

They had some hiccups here. He keeps hearing there are positive announcements coming up this fall. There might be some good fundamental stuff coming out. We are past the technology period of seasonal strength. He would hold off on purchasing it until it proves itself. Look at it later in the year.

(Top Pick Mar 26/14, Up 37.19%) They are coming out with new products. This is old tech but it has been really good to him. His model price is $54.26, or a 60% upside. It has a 2.81% yield. He has a 35% weight in old tech.

This is a similar situation to Microsoft (MSFT-N) in that they are a very large company and generate a fair bit of cash, but there is really not a lot of traction. Although PCs have had a bit of resurgence, long term he doesn’t think much has changed in terms of predictions that it will be a falling situation.

The period of seasonal strength for technology is predominantly from October through to the middle of January. However, you can see a bit of a pickup in technology from around April through to July. This is where you would want to look to make your entry point. From now into mid April, technology tends to do rather poorly. It doesn’t necessarily go negative, but tends to underperform the market. The better time to invest is more towards April to June, and ideally, from October to January.

Peaks around this time of year. January until spring it underperforms. It is a good time to take profits and move to sectors that do well this time of year.

Coming out with more chip products. 40% model price differential. 30-40% upside. 2.6% yield.

A very, very good business. Free cash flow generation is very strong and the computer cycle was better than anticipated in 2014. Thinks it will be a sound business still in 2015. A great alternative for people looking for fixed income. It will be challenged to grow going forward however.