U.S. stocks have given up earlier gains and are once again in negative territory this morning. After you receive this Alert, we will put some cash to work in the model portfolio.
We will buy 100 shares of Atmel (ATML), which is currently trading around $6.66. This purchase gives us a total of 1,000 shares of the company, which account for 4.03% of the overall portfolio.
A profit warning from Microchip (MCHP) overnight has spread selling pressure across the entire chip sector. That said, we believe the 12% decline in Atmel today is overdone. At current levels, the stock is trading at less than 11x expected full-year earnings, even though the company is on track to deliver about 50% earnings growth over each of the next two years.
In addition, model portfolio name ON Semiconductor (ONNN) is also down nearly 10% today, with the shares changing hands around $7.55. We would also consider buying another 100 shares of the company if the price moves closer to $7, where it would help our position’s cost-basis.
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