“Fourth-quarter seasonality favors bulls following a weak third quarter. Not to mention most stocks are priced for no growth,” TheoTrade Chief Market Strategist Jeff Bierman said in the MarketWatch column that offers “critical information for the U.S. trading day.”
“The valuations on half the chip stocks are trading below a multiple of seven. I’ve never seen that ever,” said Bierman. “That means when the semiconductor sector comes back, the multiple expansion is gonna be like a volcanic eruption to the upside,” he said of the sector known for its boom/bust cycles.
Bierman owns Intel (INTC), which hit a five-year low on Friday. Eventually, the company that has invested $20 billion in a new U.S. plant will come roaring back alongside rivals like Advanced Micro (AMD). “People will look back on this and go ‘Oh, my God, I can’t believe Intel was at five times earnings,’ which is insanity for this stock.”