Looking to make money in the same stocks over and over again — assuming the company’s underlying fundamentals remain strong — is something I’ve done throughout my 30-plus year career in the stock market.
Once I’ve gotten to know a certain company, I keep in on my radar in case it presents another spectacular opportunity. The stock I want to talk to you about today is one that I’ve played 20-30 times over the last 15 years, and while I haven’t won every time, it’s made me a whole lot more money than it’s lost me.
Cirrus Logic (CRUS) is a semiconductor company that is the premier supplier of high-precision analog and digital signal processing components to the audio and industrial markets. It has more than 3,100 customers on a global basis, including some of the most respected manufacturers in the entire world — Ford (F), Samsung (SSNLF), Bose and Apple (AAPL), to name a few.
Back in the day, I used to call this CRUS “crusher” for two reasons. First, because it seemed to move higher just about every single day. Basically, it crushed the market. And second, because it ended up crushing my portfolio. But that was a long time ago.
As you can see in the chart, CRUS has made a big move over the last six months. While the stock has come down recently with weakness in technology as well as the broad market’s pullback on the Greek debt crisis, I don’t see any damage to the company’s fundamentals and expect to it to continue moving higher over time.
Execution has been absolutely phenomenal as of late, with CRUS stock not only beating the Street but blowing away estimates by 25% or more. Earnings guidance for the next fiscal year has gone through the roof as a result of this remarkable execution, and yet I still think they’re going to easily beat expectations.
Now I don’t want to get too “jargon-y” here with price-to-earnings ratios and all of that, but I do want to mention the stock’s price/earnings-to-growth ratio, which has been around 0.7. Basically what this tells us is that Cirrus Logic’s earnings are growing so quickly that CRUS stock is worth just about any price you want to pay as long as the PEG ratio is under 1.
As I mentioned, I’ve played CRUS stock countless times over the last 15 years, and I’ve learned one very important thing: this is a very volatile name. Part of the reason is because CRUS lives and dies by Apple. Since Apple accounts for a very large portion of Cirrus’ revenue, any news — or more likely rumors — that Apple is considering using a different supplier sends the stock for a loop.
That being said, if you have the patience to withstand a few bumpy days, CRUS can make you a lot of money. I should know! I’ve been a huge fan of this one in the past and I continue to like it today.
Plus, keep in mind that any of those bumps along the road could be seen as strong buying opportunities.
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