Is RFMD a good chip stock to buy now?
RF Micro Devices makes chips for the wireless market, mainly for cell phones. Near-term, there is some turbulence in the market, but they are benefiting, as are all of the gallium-arsenide companies. We aren’t advising on which stocks to buy, as much as analyzing their basic business. Q: In your analysis of companies’ “basic business,” Manoj, what companies look best in this time of great nervousness? A: You have to look at three things: A specific company’s growth prospects. Then, look at valuation ratios. And then, look at the financial strength. For growth, there are different trends happening in the industry. One is migration toward more advanced geometries. Second, companies benefiting from Internet infrastructure growth. And then, within equipment companies we’re seeing some trends toward more automation. One of the companies that will benefit from these trends is Asyst Technologies [ASYT]. That company makes SMIF mini-environments and other automation products, and as chip manuf
