MicroStockProfit

I’m not sure why AMKR has dropped so far, so fast.  It appears, on its face, that the company is doing the right things and the news has been mostly good.  Doesn’t matter…persistent selling has knocked off 50% of the company stock price since its most recent high.

Here is the chart, so you can see what I am talking about:

It is a large company (definitely not a penny stock) that is involved in the semiconductor business and has had some “choppy” financial results lately.  What I mean by that is that it has posted both losses and profits on different quarters in 2009.  The balance sheet is reasonably strong….good cash and liquidity ratios although debt is high (over $1.5 Billion).  Nothing to worry about there.

Why the drop?  I took a quick peek and couldn’t find anything.  I will do further research later, but for now I wanted to bring this company to my readers attention.  I think that it has a very attractive chart, is sitting on or near strong support, it is in an industry (semiconductors) that seems to be getting “off the mat” and has the financial strength to weather this financial storm we are in.

It did bounce off support yesterday….I would suggest watching to see if it re-touches support or continues its bounce.

Enjoy your day in the market!

The list of industries in freefall during this recession must include the semiconductor business.  Emcore Corporation (EMKR) provides compound semiconductor-based components and subsystems for the broadband, fiber optic, satellite, and terrestrial solar power markets.  Most of their customers rolled up their tent and went home during this recession.  However, it appears that the news is getting better for the industry as a whole and EMKR in particular…prices are stabilizing and demand has begun to pick up slightly.

EMKR has been posting some horrific quarterly numbers and I don’t see a huge turnaround coming next quarter.  However, the balance sheet is strong enough to keep the company afloat for now.  No long-term debt helps, but EMKR needs to keep cutting costs and hoping that the market comes back for their long term viability.

This is strictly a small cap, penny stock chart play.  EMKR is coming off the mat and may have a run in it.

All of the indicators are turning positive for EMKR.  The stock is under accumulation once again, the MACD is crossing the signal line (albeit still below the zero line), and the stock is bouncing off of the support level of $1.00.

Put it on your radar list and watch how it trades today.  It might be a good short term play.  Put a tight stop on it in case it tanks.

Good luck and good trading.

___________________________________________________________________________________________________

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

I did not know (until I looked it up) that the word Vitesse means “speed”…as in going fast. It is mainly a European word, but there have been a number of European sports cars that have had the name “Vitesse” in their names.

Interesting trivia about today’s blog subject, Vitesse Semiconductors (VTSS), and I hope indicative of their stock price movement soon.  To be honest, Vitesse has not gotten much love lately from the stock market.  After releasing their third quarter 2009 update, the stock plummeted from a recent high of 45 cents on August 10th to 25 cents one week later.   You can read the report for yourself here.  It certainly wasn’t great news, but it was in-line with the general economic conditions that we are experiencing.  What impresses me is that the company appears to be making some smart moves in order to ensure the long-term viability of the company:  raising cash, paring expenses, selling non-core assets and operations, etc…   Another encouraging sign is that 5% owners and insiders own 16% of VTSS and are not selling.  I would like to see some insider buying, but at least they are not like rats leaving a sinking ship!

The stock has come back up to 31 cents recently, but has farther to go in my opinion.  The chart tells me that the stock is under accumulation again and stock might be turning.  Here is the chart:

As you watch this stock, pay attention to the MACD.  It appears to be turning bullish.  Once it turns and gets above the zero line, it could really run.  The thing to remember with the MACD though is that it is a trailing indicator.  Watch the RSI and stochastics and monitor the buying activity.   If this stock runs back up to its recent high, then that will be a great gain for my readers.  The stock has a 52-week high of only 94 cents.  Make sure you don’t ride the run too long and keep a tight stop in it in case it doesn’t have enough “speed” to continue its run.

________________________________________________________________________________________________

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Things just just seem to be getting worse and worse for the semiconductor industry. According to trade group SEMI, Q2 Worldwide semiconductor manufacturing equipment billings were down 26% from the first quarter of ‘08 and nearly 30% from Q2 ‘07. Moreover, the Philadelphia Stock Exchange Semiconductor Index (1-yr. chart below) hit its lowest point since 2004 on Monday and is down nearly 35% from last September.

‘08 Semicon Spending to Approach ‘05 Levels

The writing was on the wall by the end of 2007 as the overall industry failed to record double digit growth for the first time in its existence. For the record, the worldwide semiconductor space generated just under $274 Billion in revenues according to Gartner for a measly 3.8% increase over the prior year.

Looking forward, SEMI also stated this week that worldwide semiconductor equipment bookings were off 13% and 30% from Q1 ‘08 and Q2 ‘07 respectively. Commenting on the downtrend, SEMI’s senior director of industry research Dan Tracy recently commented: “Spending for new semiconductor equipment is down considerably as anticipated,”. “Overall 2008 spending will approach 2005 levels, with a recovery expected for next year.”

Legacy to the Rescue!

As I’ve mentioned in previous editions, an industry downturn, although troubling for manufacturers, presents a unique opportunity for companies boasting solutions that help improve margins. One company in our portfolio poised to do just that is Legacy Holding Inc. (OTCPK: LGYH).

For the record, Legacy is the only semiconductor-related company to ever win the prestigious U.S. EPA ‘Green Chemistry’ Award. In a rough and tumble economic environment the company’s technology demonstrates a significant value proposition for the $7 billion per year silicon wafer cleaning industry in 4- key ways:

1. Improving wafer processing time by 200%;
2. Enhancing oxide removal control by 92%;
3. Decreasing costs by 22% by reducing the amount of consumable materials used in wafer cleaning; and
4. Reducing particles left on the wafer after cleaning by 76%.

As equipment manufacturers strive to survive over the next 6-12 months while spending on their products dips, Legacy could in theory benefit from the overall industry downturn. The company has already proven itself to some extent through established relationships with Tyco, Micrel Systems, Silicon Genesis, the largest semiconductor equipment manufacturer and the largest solder bump deposition manufacturer worldwide.

In terms of generating business in a down market, Legacy’s CEO should be able to leverage his extensive rolodex of contacts into the development of new contracts.

CEO Has More Than 30 Years of Experience

If you’re not overly familiar with the company, at the risk of repeating myself for the upteenth time, Robert R. Matthews is a chemist with nearly 30 years of experience in the semiconductor industry with time spent as a process engineer at Texas Instruments (NYSE:TXN) and Intel Corp. (NASDAQ: INTC ). Mr. Matthews has also fostered deep ties with other leading semiconductor-related organizations including Applied Materials (NASDAQ: AMAT ).

What About the Stock?
After steadily losing value since around 7/30, the stock gained some steam on Tuesday, advancing more than 8% on nearly 25,000 shares traded. Who knows? Maybe the market has finally woken up and digested Legacy’s recent annual filing which exhibits a year-over-year revenue increase of 537% and net income of $101,846 in 2007.

Or maybe it was their recent quarterly filing. For the 3 months ended 6/30/08, Legacy logged net income of $92,618 on revenue of $222,334 vs. a net income of $48,809 on revenue of $182,778 in the corresponding quarter of ‘07.

The company also recorded a positive net income per share of $.01 vs. $.0 during the same period of ‘07. In regards to income from operations on a quarterly basis, LGYH made some significant improvements, decreasing operating expenses by nearly $40,000 and notching operating income of roughly $93,000 vs. about $35,00 in the corresponding quarter of ‘07. All in all, Legacy’s financial performance improved by just about every possible metric on both an annualized and quarterly basis. Something to take into heavy consideration when deciding whether or not to get into the stock’s next potential run.

Don’t forget, after nearly 4 months of losing value from March to June, LGYH rebounded back valiantly in late July before giving back nearly 100% over the past few months. I’ll be watching closely this morning to see if we are indeed about to witness yet another uptrend. Tuesday marked the first green close in more than 13 trading sessions, and we also saw some of the heaviest volume in the stock in quite some time, so, I strongly suggest putting Legacy on your radar screen this morning. Trust me, you’ll be glad that you did!

Sign up for our FREE Newsletter