Ronnie Moas Downgrades Silicon Motion; Recommends Other Stocks To Roll Proceeds Into

• Since September of 2012, shares of Silicon Motion Technology Corp. (ADR) SIMO, a small cap Taiwanese fabless semiconductor company, have gained almost 115 percent.
• Ronnie Moas, Founder & Director of Research at Standpoint Research, recently noted that the stock is now “fairly valued at 14X.”
• Consequently, he decided to downgrade the stock.

After shares of Silicon Motion Technology Corp. more than doubled since September 2012, Standpoint Research’s Ronnie Moas decided to downgrade the stock. “I can no longer leave my highest recommendation attached to this name now trading with Relative Strength above 90 and a P/E that is 1.2X what it has historically traded at,” he explained.

Having said this, however, the experts still sees some value in the stock, with 15 percent of the company’s market cap in cash -- and no debt. Nonetheless, he continued, he must move to the sidelines to account for the recent absolute and relative moves.
Shorter Term

Moas went on to point out that shares of Silicon Motion have bounced 50 percent off their August low and “should make a run at the all-time high of $37.60 in 2016.”
“The upside here is matched by the downside risk though,” he added, explicating he likes names with a 2:1 ratio, and Silicon Motion’s ration is now down to 1:1.

For investors looking for tech names to roll Silicon Motion proceeds into, Moas recommended Israeli names Perion Network Ltd PERI, Orbotech Ltd ORBK and Tower Semiconductor Ltd. (USA) TSEM. Other names he likes are Micron Technology, Inc. MU, Flextronics International Ltd. FLEX and Kulicke and Soffa Industries Inc. KLIC -- to name a few.
Finally, the expert noted that Orbotech is getting close to an eight-year high, but still remains undervalued by more than 20 percent.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.