I have been shying away from talking about individual stocks lately because everything is so macro driven these days and stock picking has been almost irrelevant. However, that does not mean you should completely forget about individual stocks because you should have a shopping list ready once things settle down, which they eventually will. Here is an interesting stock that might be worth examining further: Cree Corp. (CREE)
According to Yahoo! Finance, the company develops and manufactures light emitting diode (LED) products, silicon carbide (SiC) and gallium nitride (GaN) material products, and power and radio frequency (RF) products. Its LED products include LED chips used in various applications, including video screens, gaming displays, function indicator lights, and automotive backlighting; LED components; and LED lighting products.
Great Quarter… Turning Point?
Cree reported fiscal fourth-quarter earnings that beat expectations, but were down sharply from last year. However, with the stock down almost 50% in the past year, this was good enough for a nice pop in the stock and several analysts think more is in store for the company.
Canaccord Genuity is bullish on the fact that Cree is finally begin to work down its inventory levels in relation to its sales and cost of goods sold. High inventory levels are a huge red flag for a company as it signals poor demand from customers.
I like the fact that expectations have been reset so low that even a slight warning for the next quarter didn’t stop the stock from rallying double digits in a horrible broader market. This tells me that the selling pressure has likely run its course. If the company can continue to improve its operating metrics, I think there is big upside in the shares.
The balance sheet is strong with no debt and a cash position that amounts to almost $10 per share. It has a strong operating margin of 21.7% and is trading at only 1.45x book value. Again, I think this is a stock worth watching once the broader market settles down, but the way things are going, the macro picture takes precedence at the moment. That won’t always be the case and CREE is a great stock to keep on your watchlist.
Bright Spot In A Dismal Tape? is an article from: 
