By Yaser Anwar, CSC of Equity Investment Ideas
In the Tech 07 conference, MSCC’s management stated that business remains robust and enjoys strong business trends across the board. From commercial aerospace, satellite to defense, all witnessing solid demand. In commercial air, which is 20% of MSCC’s sales, there is Boeing’s commercial aircraft backlog, which is growing solidly, from 440 07 to 515 aircrafts in 08, up 17%.
I like MSCC given its solid growth prospects in defense equipment, medical devices, and LCD TVs, and also its diversified revenue streams, its pricing benefits from military customers, and its stability dynamics.
Microsemi’s analog business, similar to the industry, has experienced challenging short-term fundamentals due to excess inventory situation. Management is particularly upbeat in opportunities related to LCD TV and emerging new power management offerings.
While fundamentally MSCC sounds fine, one of the main reasons I like MSCC is its technicals.
MSCC has recently made a double bottom and has been rising on excellent volume. Yesterday it was up 9% and the stock is witnessing strong accumulation, evident by the OBV just launching into the stratosphere since 07.
MSCC 1-year and 6 month charts
Another positive is, yesterday it broke its 50-day MA and completed a 61% fibonacci retracement. If you look at the chart, the area since 07, you’ll witness the stock dropping on lower volume and rising on higher volume. These are text book signs of a stock ready to take off.
I would take a position in the stock at this level, and put on more once it breaks the $22 level, where it sold off in November.
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