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JimVanMeerten (66.43)

Cell phone parts supplier

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September 02, 2010 – Comments (1) | RELATED TICKERS: RFMD

This morning I added RF Micro Devices (RFMD) to the Barchart Van Meerten Speculative portfolio. The company is a global leader in the design and manufacture of high-performance radio systems and solutions for applications that drive mobile communications. RFMD's power amplifiers, transmit modules, cellular transceivers and system-on-chip solutions enable worldwide mobility, provide enhanced connectivity and support advanced functionality in current and next-generation mobile handsets, cellular base stations, wireless local area networks, wireless personal area networks and global positioning systems. Recognized for its diverse portfolio of state-of-the-art semiconductor technologies and vast RF systems expertise, RFMD is a preferred supplier enabling the world's leading mobile device manufacturers to deliver advanced wireless capabilities that satisfy current and future market demands.

The cell phone industry is projected to increase year over year sales by 10% and RFMD supplies parts that are included in over half of all cell phones sold. This year they experienced a 70% increase is sales of their 3G hardware and they are deeply in development of their 4G product line.

Wall Street brokerages are high on this stock and have 13 buy recommendations distributed to their clients. Sales are projected to increase by 11.40% this year and 5.60% next year. Earnings are estimated to increase by 26.00% this year, 7.90% next year and continue at an annual rate of 15.00% for at least 5 years.

Technically the stock is on the move. The stock hit 12 new highs in the last 20 session and Barchart's technical indicators have 11 out of 13 buy signals for an 80% short term buy rating. The 14 day Relative Strength Index is 66.01% and rising. The price has appreciated by 20.83% in the last month and recently traded at 5.20 well above its 50 day moving average of 4.34.

The regular investor has discovered this stock and investor sentiment as measured by the CAPS members on Motley Fool vote 667 to 38 that the stock will beat the market with the All Stars voting 145 to 3. Fool notes that of the Wall Street columnists they follow 14 of the last 15 articles have been positive.

Points you should consider are:

1 - Wall Street buy reports to clients based on projections of increases in sales and earnings

2 - Recent price momentum including 12 new highs in the last 20 trading sessions

3 -  Barchart short term buy signal of 80%

4 -  A large and positive investor sentiment

Jim Van Meerten is an investor who writes on investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: No positions in the stock mentioned at the time of publication

1 Comments – Post Your Own

#1) On September 02, 2010 at 3:39 PM, awallejr (82.68) wrote:

Interesting pick, but this concerns me:

Sales are projected to increase by 11.40% this year and 5.60% next year. Earnings are estimated to increase by 26.00% this year, 7.90% next year

While growth is always goo, that seems to be a substantial dropoff.

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