The indices continue to look good as a number of high-flying stocks are pulling back to support and giving investors an opportunity to buy at lower prices. Based on both technicals and fundamentals, these five stocks could be positive buys in the next week. (For related reading, take a look at Fundamentals And Technicals: Together At Last.)
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On the Radar
Skyworks Solutions (Nasdaq:SWKS) is a chip company that supplies semiconductors to cellular devices, including the Apple (Nasdaq:AAPL) iPhone. The stock has had a big run in 2010, however it has pulled back over the last couple of weeks. Not only is the stock technically sound, the earnings are there to back up the buy recommendation. The company reported 56 cents per share in earnings in 2009 (year ending October 2, 2009), and the First Call estimate for 2010 is $1.22, followed by $1.54 in 2011. That is average annual growth of around 50% over the two-year span. Based on 2010 earnings estimates, the stock is trading with a P/E ratio of 17.4; this is too low for a growth story like SWKS. A good buy point is near $21 per share.
A Solid Leader
Decker's Outdoors (Nasdaq:DECK) is the maker of the always-popular UGG sheepskin boots that are consistently a top seller during the holiday season. The company recently broke out of a consolidation pattern on heavy volume, prompting the stock to move to the buy list. Fundamentally, the stock is trading with a P/E ratio of 15.1 based on the First Call earnings estimate of $3.52 per share in 2010. Based on past holiday seasons, DECK has been a leader in the retail sector and there is no reason why it should not continue its solid performance into the end of the year.
Broadcasting a Bright Future
American Tower Corp (NYSE:AMT) is considered a broadcast and communications infrastructure company, but is more well-known for its growing number of wireless communication towers. As the demand for more data via wireless devices increases, the demand for more towers to transmit the data will benefit AMT. The stock recently pulled back from a 10-year high and is finding support in the $49-50 area. Fundamentally, the stock is not cheap, with a forward P/E ratio of 46.4. However the demand for AMT's towers should continue to grow substantially in the future.
Open the Gates
iGATE (Nasdaq: IGTE) provides IT outsourcing solutions around the globe to help clients optimize their businesses. The stock hit a 10-year high in mid-September and has since been consolidating above support in the $17-18 range. The bullish volume coupled with the consolidation make IGTE a buy, according to technicals. Fundamentally, the stock is trading with a forward P/E ratio of 19.14, which is impressive for a stock in a growth sector.
Within Arm's Reach
ARM Holdings (Nasdaq:ARMH) is a chip stock that claims to be the world's leading provider of physical semiconductor intellectual property. The stock has more than doubled in 2010 on the back of smartphones and TVs. After hitting a 10-year high in September, the stock is down 10% and now a buy candidate on the pullback. Fundamentally, the stock is not a bargain with a forward P/E ratio of 40.9. However, the sector warrants an abnormally high valuation.
The Bottom Line
Make sure to complete your own due diligence before proceeding with buying any of the stocks mentioned. What works for one investor might not fit in another's portfolio.
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