BOSTON, Oct. 9, 2003 (PRIMEZONE) -- As semiconductor stocks slumped in the last half of September, Paul McWilliams advised members of his newsletter, the pmcw Report (http://www.pmcwreport.net/) to buy on the weakness.
This bullish sentiment isn't a surprise to his subscribers. A twenty-plus year veteran in the industry and named by SmartMoney as one of the most influential people in the world of investing, McWilliams has been advising subscribers for nearly a year that the sector would realize a broad-based recovery in 2003.
In late September, McWilliams published a special report reaffirming his industry outlook for 2003. Not as widely understood by retail investors, McWilliams focused on the impact of an increasing average-selling-price (ASP).
"The significant increase in ASP and the field reports we've received during the last couple of weeks lead us to believe there will be upside surprises in the semiconductor sector. We also believe that numerous companies will increase their fourth quarter guidance. We feel the strongest sectors driving Q3 growth will be PC, consumer and storage with telecom and IT starting to show strength."
While McWilliams holds a positive stance on the remainder of 2003 and into early 2004, he is far from "blindly bullish." He prefers to take a "focus stock" approach.
So far, it's working. Since a September 2002 inception, the site's model equity portfolio has returned a staggering 290%, well outdistancing the Nasdaq's 45% gain.
Recently, he has been bullish on shares of broadband infrastructure player, Harmonic (Nasdaq:HLIT). He built a foundation in Harmonic last fall when it was trading for just over $1. He has since suggested it as a buy during the summer in the mid-$3 range and again in September in the mid-$5 range. Shortly after his last recommendation, Harmonic shares shot to the mid-$7s.
Harmonic is currently one of three focus stocks up over 100% in his portfolio.
Looking forward to earnings season, McWilliams had the following equity-specific comments:
He thinks Intel (Nasdaq:INTC) is in a position to beat expectations in Q3 due to a combination of positive factors including the sharp increase in September sales by Taiwanese Mother Board and the continually hot PC sector.
McWilliams thinks that Vitesse (Nasdaq:VTSS) is also positioned to have a solid third quarter, but more importantly, increase guidance for Q4. "They have a strong interest in the mass storage market which we believe is doing well, as well as a leadership position in telecom." Vitesse has been on the radar screen of pmcw members since January 2003 when it was recommended at $2.16 a share, for a gain of 230% gain.
August's 4.7% increase in sale for digital signal processors leads McWilliams to believe that the inventory issues in the cell phone market have been resolved. "This should reflect positively when Texas Instruments (NYSE:TXN) and Analog Devices (NYSE:ADI) report their Q3 sales."
Outside the semiconductor space, McWilliams likes EMC (NYSE:EMC). "All indications lead me to believe the mass storage market is doing very well - probably better than most think. I think EMC will make for a great long-term large cap technology investment."
He also likes what he sees from Apple (Nasdaq:AAPL) and thinks something the company has "been far too quiet during this PC boom." McWilliams recommended Apple to his members in June under $19 a share.
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