Goldcorp, Chesapeake Granite Wash Trust,Intel,Altera and Microsemi highlighted as Zacks Bull and Bear of the Day
CHICAGO, July 9, 2014 /PRNewswire/ -- Zacks Equity Research highlights Goldcorp (NYSE: GG-Free Report) as the Bull of the Day and Chesapeake Granite Wash Trust (NYSE: CHKR-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onIntel Corporation (Nasdaq: INTC-Free Report), Altera Corporation (Nasdaq: ALTR-Free Report) and Microsemi Corporation (Nasdaq: MSCC-Free Report).
Here is a synopsis of all five stocks:
I'm going to make the argument for Goldcorp (NYSE: GG-Free Report) in two parts. First I'll make a pretty bullish case for gold, then I'll make the case for the best gold stock to buy right now. With this powerful one-two punch, I think that this Bull of the Day will lead to big time profits.
I could probably give you several arguments for why gold is on the move right now. Negative interest rates in the Euro Area. Continued bond purchases by the Fed. Japan's application of Abenomics. The Chinese shadow banking system. Insert theory here.
Today, gold futures traded near $1320 for most of the session. This is a far cry from where we were trading a month ago right about the $1250s. Looking back to the all-time highs skews your perspective of the move we are in now. I'm not here to make an argument for $1800 an ounce. Being a little more conservative here can still allow us to make some big bucks betting on a much smaller move.
The last time gold approached $1400 was March 2014. That marked the end of a run for gold that began the last day of 2013 with prices below $1200. The run took three short months and gold moved over $200 from the start. Using this crude and somewhat elementary observation and applying it to our current situation that puts gold close to $1500 an ounce by September.
Today's Bear of the Day is a lesson in dividends. Like the big, shiny ones that people gravitate towards without knowing the entire story. It's a warning to at least slow down and check the water out before diving in head first. The Bear of the Day is Chesapeake Granite Wash Trust (NYSE: CHKR-Free Report).
CHKR is not your typical stock. When you buy shares of CHKR you're not investing in a company, you're purchasing shares of a royalty trust. Royalty Trusts are entities that own the production rights on oil wells, natural gas fields and iron ore mines. Part of their appeal is that these trusts typically pay out 90% of their earnings on the production to the shareholders as a dividend. As a result these trusts have incredible yields.
You have to be careful when selecting which trust to buy as not all trusts are created equal. Some own the rights to wells that are decreasing in production year over year and are basically a losing proposition. Other trusts have termination dates in the near future which mean the trust will cease to exist and become worthless.
So then what is the problem with CHKR? Well analysts have continued to revise their earnings expectations for the trust to the downside. They are basically telling you that the underlying wells are becoming less and less profitable over time, so that dividend that looks so nice right now will have nowhere to go but down. That's why it's stuck with a Zacks Rank #5 (Strong Sell) in an industry that's in the bottom 3% of all the industries we track with our Zacks Industry Rank.
Intel, Panasonic Ink Manufacturing Deal
Intel Corporation (Nasdaq: INTC-Free Report) has signed an agreement with Panasonic Corporation's System LSI Business Division to produce system-on-chip (SoC) products for the latter, using its proprietary 14-nanometer (nm) Tri-Gate transistor technology.
Intel's Tri-Gate technology is a proprietary 3D transistor technology and its 14-nm transistor technology for SoC is a highly developed and enhanced version of the Tri-Gate process technology. These transistors enable efficient and high performance chips compared with the earlier versions of transistors. Therefore, this allows chip designers to select transistors for low power or high performance, based on the applications.
The chips produced will be used in audio visual equipment and offer higher performance and functionality at lower power levels.
The collaboration should be a positive for both the parties. Intel's advanced manufacturing facilitates the fabrication of highly integrated, more powerful chips that generate less heat at lower costs. Therefore, Panasonic's SoC products using Intel's technology will have a lead over chips offered by traditional manufacturers like Taiwan Semiconductor Manufacturing Company.
For Intel, this is a golden opportunity to ramp up production at its fabs and drive up utilization rates.
Recently, Intel expanded its foundry partnership with Altera Corporation (Nasdaq: ALTR-Free Report) to manufacture advanced multi-die devices, using its 14-nm low-power manufacturing process. Additionally, Intel's custom foundry business has announced agreements with other semiconductor companies namely Achronix Semiconductor, Tabula, Netronome and Microsemi Corporation (Nasdaq: MSCC-Free Report).
We believe these agreements will be beneficial for Intel's Custom Foundry business which should in turn drive up utilization rates and boost results, going forward.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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