February 09, 2010 –
Feb 9, 2010 01:35 PM | about stocks: HL, SLV, SLW, CDE, MVG, EXK, SSRI, ABX, PAAS, BVN, BHP, VSH, CSCO, IBM, NOK, SNE, INTC, CY, NVDA, ADCT, TXN, ALTR, MRVL, AMAT, AVT, BRCM, XLNX, JNPR, MSTR, GOOG, BIDU, AMZN, TM, F, HMC, TTM, CAAS, WATG, BA, BEAV, LMIA, NOC, LMT, RTN The CEO of Cisco said there were shortages throughout the food chain, meaning semiconductors were needed to make his product. The reason investors need to know this is that almost all of these semiconductor stocks are down since they reported, and it’s important to remember, Cramer said, that SOX stocks are now secular growth stories such as these that have nothing to do with the larger economic issues.The bottom line: The Sox are back, and for this reason, Cramer thinks investors should buy one of the semiconductor stocks.
He thinks they should be recognized as products of a secular trend because we use more semiconductors in gadgets, and these gadgets are being embraced by emerging middle classes everywhere from China to India to Latin America. Plus, the Mad Money host thinks that SOX is twice blessed, not only for their products being used in tremendous growth, mostly related to the smartphone revolution, but also to the potential new customer base, which could amount to roughly a billion people, spotting you 700 million emerging members of the middle classes just in China and India alone.
Cramer said investors need to comprehend two concepts, cyclical and secular growth. Cyclical refers to a company that may not have control of its destiny and bends according to the economies around the world, which is a sign of weakness. Secular means a company has something else going for it besides the economy, a trend that’s bigger than anything the business cycle can throw at it. And, Cramer said investors will pay a premium for this type of stock.
Author is long Semi-conductor shares VSH & long shares of silver producer HL
Themes: Silver to rebound on semi-conductor demand. Stocks: HL, SLV, SLW, CDE, MVG, EXK, SSRI, ABX, PAAS, BVN, BHP, VSH, CSCO, IBM, NOK, SNE, INTC, CY, NVDA, ADCT, TXN, ALTR, MRVL, AMAT, AVT, BRCM, XLNX, JNPR, MSTR, GOOG, BIDU, AMZN, TM, F, HMC, TTM, CAAS, WATG, BA, BEAV, LMIA, NOC, LMT, RTN [more]