Tech Stock in Danger of Taking a 20% Plunge

Sanmina (SANM) — This company provides integrated electronics manufacturing services to original equipment manufacturers (OEMs).

The company has had a spotty earnings record since reporting a loss of $1.65 per share in 2009. For fiscal 2014 (ending in September), S&P Capital IQ expects earnings to jump to $1.91 per share, up from $0.93 in fiscal 2013. However, this is down from $2.16 per share the prior year.

Technically SANM broke down from an intermediate trendline that began in April, as well as its 50-day moving average. There is no evidence of a high-volume selling climax, i.e., bottom, and MACD is very bearish. It appears the selling could continue until support is reached at its former breakout price of $18, almost 20% below current prices.

Sell SANM short with a stop-loss order at $25. Short selling is a speculative technique that is not suitable for all investors. Use a stop-loss order to protect against potentially unlimited losses. And check with your broker for any special requirements and the ability to borrow the stock.

SANM Chart
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