Chip Stock’s Chart Lighting Up With ‘Buy’ Signals

by Sam Collins | May 16, 2013 1:09 am

Microchip Technology (NASDAQ:MCHP[1]) — This leading manufacturer of specialty chips for the computing industry has sold more than 7 billion microcontrollers since 1990.

With a dividend yield of 3.8% and fairly predictable earnings growth, the stock appears undervalued. Analysts estimate earnings per share of $2.23 for fiscal year (FY) 2014, ended in March, and $2.54 for FY 2015.

For over a year, the stock has traded within a 9-point range from $29 to $38. But buying volume is increasing, our internal indicator, the Collins-Bollinger Reversal (CBR), has flashed three buy signals, and the pattern formed is that of an extended cup-and-handle (long-term buy signal).

A break above $38 provides a trading target of $46, but investors could see much higher returns.

MCHP Chart
Click to Enlarge

Trade of the Day Chart Key[2]

Endnotes:
  1. MCHP: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCHP
  2. [Image]: http://investorplace.com/wp-content/uploads/2011/04/chart-key.gif

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