Hope everyone had a terrific Labor Day Weekend and is ready to get back to business. Most investors are returning to the market after the summer break, and we should see a nice rise in volumes. We still have one position open in KB Homes (KBH). I left the position open on Thursday for a Short Sale with an average entry of 11.62. The market has brought this position back into neutral ground today, and I am hoping to exit this position for a small gain finally. 

We are going to start off the week with a Play of the Week. Here it is…

 

Play of the Week: National Semiconductor Corp.

Analysis: Its a slow week on the earnings front. The big names are Shanda Games (GAME), Lulumon Athletic (LULU), and National Semiconducor (NSM). The one that stands out to me is that last name…especially the semiconductor part. Say what you want about overusing something, but I have had consistent success with these plays. NSM is in the broad line semiconductor industry, and it is projected to report an EPS of 0.35 vs. 0.13 one year ago. With the market making a pullback today, it has created a buying opportunity for NSM. National Semi works closely in the analog sector with mobile companies, automotive companies, PV makers, industrial equipment, and more.

Since the beginning of July, 16/20 of reporting companies have reported positive surprise earnings. NSM’s most consistent competitors and similar companies include Analog Devices Inc. (ADI), Maxim Integrated (MXIM), and Texas Instruments (TXN). These companies reported surprise earnings of 9%, 7%, and even, respectively. In the three day movement into earnings, ADI jumped over 7%. MXIM jumped 2%, and TXN moved down into earnings but moved over 5% in the three days after reporting earnings. NSM is in an industry that for the most part moved into or out of earnings, and NSM is currently three days before the earnings report is looking like it is ready to move up into earnings with its current undervaluation.

In the past three months, the company has been continuing to become a major player in analog devices. The company boosted its dividend, acquired a new company, got a great upgrade, and introduced a new industry device that could pave a great wave of future customers. In July, the company raised its dividend by 25%. Any rise in a dividend is a great sign of a healthy company for…
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