One semis stock looks like a buy as chipmakers break out, trader says $SMH (via TradingNation)
is on track for its third positive week in a row, adding more than 11% since a low on Aug. 23."In the last month, the stock prices for the industry have gone up but earnings haven't, and you just see that being stretched, so I'd be a little more particular about which semis you get into," Gibbs said on CNBC's "Recent gains have taken the SMH ETF's price-to-earnings ratio up to 17.5 times forward earnings, a high not seen since July.
," said Gibbs. "Yes, the price has been going up, but it's the one stock that really has had a turnaround in its earnings expectations. ... There's just been a huge upward revision just in the last few weeks from multiple banks, so Wall Street definitely has a more positive outlook there." Analysts have an average overweight rating and $49.40 price target on Micron, according to FactSet data. Micron moved above that price target this week.
J.C. O'Hara, chief market technician at MKM Partners, says the long-term trends in the semis space remain strong even with trade uncertainty causing choppiness. "However, my one concern is over the short term," said O'Hara on CNBC's "Trading Nation" on Thursday. "We're pushing against critical resistance at $123. So, we have a long-term good setup, but short term we're overbought and at resistance. So I believe the best play right here is to be patient, to wait for a pullback, but to be buyers of a pullback because I think the long-term trends will ultimately break this ETF out to new highs.
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