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Trade Alert: Can Touch This

Cody Willard

Cody Willard

— 2 min read

The charts legit either work hard, Or you might as well quit
That’s word because you know, Can’t touch this – MC Hammer (Here’s my band The Muddy Souls doing our ‘cover’ version of this song)

Markets ebb and flow. Fear builds in a decline, feeding on itself and contributing further to the decline. Greed builds in a rally, feeding on itself and contributing further the rally. The broader indices are down a few percent from their all-time highs but that hides the massive sell-off in many sectors and in individual stocks that are down 70% or more from their 52-week highs.

I’ve spent much of 2014 reducing the total number of my positions, raising cash and growing more defensive. I doubt that I’ll get as aggressively long stocks as I was from 2010-2013 until this cycle plays itself out or unless the markets crash to give us another opportunity to load up in a high-fear crisis sometime sooner than that. But that doesn’t mean that we can’t find some incredible revolutionary growth trends to get in front of and to opportunistically find trades and investments to profit on. And in that vein, I’ve got a new stock pick for us to add to the portfolio.

Synaptics – You know I love to invest in “platforms.” Synaptics has rolled up some of its competitors to transform SYNA into a platform company. SYNA now dominates the chip supply chain for mobile display motherboards, including touch, fingerprint, and display drivers. I wrote about Synaptics in “25 Stocks for the Wearables Revolution” which you can read for free here, and I’ve updated the numbers for you below:

  • Price: $64 (Market cap $2.36B)
  • Net cash per share: $10.87
  • 2014 Revenue: $663.6 million
  • Revolution Investing revenue growth rate estimates for next three years (annualized): 20-30%
  • 2014 Earnings per share (consensus): $4.92
  • Revolution Investing EPS estimates for the next three years:: $5.00, $6.50, $7.50
Sensors and interfaces. That’s what every drone and robot and wearable has to have, if they’re going to provide any interaction with the real world and real human beings, after all. As one of the leading developer and vendors of chips that interact with human touch, Synaptics products are on many of your notebooks, tablets, smartphones, and all kinds of digital devices. The company’s capacitive touch sensing technologies include gestures, momentum and movement sensors and interfaces.

I’m adding Synaptics to the Revolution Investing portfolio today and starting a first tranche position of about 1/3 the full common stock position I’ll want to own in my own personal portfolio today.

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