Market Overview

Tech Sector: The Company With the Best Enterprise, Product Value

By Sean Udall

When I was first putting together my concept pitch for a technology newsletter to Minyanville, I had all kinds of ideas, but one of the main ones was wanting to engage subscribers and make them a part of the product as well. In addition to my regular trade ideas, theses, and analysis, I wanted to make sure subscribers were getting answers to the questions they might have -- whether on stocks I've already written about or ones they're interested in. So, with the launch of TechStrat, we included a mailbag section. Thus far the feedback has been great and I've enjoyed doing these. Below I share a few recent mailbags that I think you'll find beneficial.

(To see James Debevec's piece on why now is not the time to invest in silver, click here.)

I invite you to take a 14-day free trial to TechStrat and if you have any questions in the technology sector you can send them to tech-strat@minyanville.com and I'll do my best to answer them in the TechStrat mailbag. I also welcome any feedback you might have to that email address.

(To read Todd Harrison's article on the calm before the storm, click here.)

Rob writes:

Going with the theme that you can't own them all, which do you feel offers better enterprise and product value here: PMC Sierra (PMCS), Max Linear (MXL) or Tekelec (TKLC)?

Any input would be greatly appreciated.

Love the service, Rob

Rob,

Thanks for the question and kind words.

If I'm interpreting your question correctly (enterprise and product value) -- the answer would be PMC Sierra. It has the larger product base and a deeper pool of engineering and R&D. Moreover, it added a host of smart acquisitions during times when the rest of the world wasn't buying anything. At some point this should pay off handsomely and it might just start happening this year.

(To see William Fleckentein's thoughts on Newmont making a game-changing announcement, click here.)

If the question was which of these three has the most potential upside from current levels, I would go with Tekelec. It was severely undervalued in the $11-12 range so at current levels it's that much more so. My biggest concern with Tekelec is a CTV- or GSIC-type bid here at these low levels.

With Max Linear, I'm simply waiting for the price action to stabilize. In our post-2007 no-uptick world, these small/mid cap names can trade far more distressed than even formerly irrational price levels -- especially certain post-IPO names. It's now under 2.5 times net cash and I hit this name after the six-month post-lockup period. Usually that is the one that puts the most pressure on the stock. The way Max Linear is acting, it must be in or approaching another post-lockup period.

To read the rest, head over to Minyanville.)

Posted-In: Tech

 

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