A Merry Upwind

The upwind of winter is in full gale. Last week was tremendous. After writing an ecstatic recap of Wednesday’s action, I watched my current positions rise even further on Thursday and Friday. Here are the results for last week:

- Maxtor +24%

- UTStarcom +13%

- ProFunds Ultra Semiconductor +6%

- Disney +0.1%

A fine week, I’d say. Take a look at the bottom of my Kelly Command Center box at left to see ongoing results. Those look even better.

Per usual, the financial press is already doubting the rally. Coming off a great week for semiconductors, several analysts expressed concern that Intel didn’t do better last Friday after Thursday’s midterm report in which the company raised fourth-quarter revenue estimates by 6%. Although the stock fell 2% on Friday, it gained 2.6% for the week. Call me quaint, but I consider rising revenue estimates and a rising stock price to be rather bullish and am, therefore, content to stay put in our Ultra Semiconductor position.

The big story for our portfolio (by “our” I mean mine and yours, if you happen to follow the suggestions on this site) is, of course, Maxtor. It seems hard for a story to be big, though, when there’s little new to say. I bought it cheap expecting a recovery. Now it’s recovering.

I’ve watched the stock since last January when it was trading at $11 and was recommended by SmartMoney magazine. When I finally bought at $3.25, I did so in the firm belief that the company would overcome a grab-bag of problems facing it, including the departure of its CFO and CEO in a two-month period.

Those problems are being overcome and, as one of the largest disk-drive companies on the planet, Maxtor stands to do very well in its rising industry. It’s the lowest-priced of the disk-drive companies and, therefore, will most likely enjoy the sharpest stock price appreciation as the industry grows. With more devices requiring data storage all the time, the future looks good. For instance, just a few years ago nobody thought of cars as a place where computer disk drives would be a standard feature. Now, with navigation systems and luxury preference settings and various other gizmos on the way, even the family truckster is a potential Maxtor customer.

Ignore the doubters. This winter rally is looking good.

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