“By This Time Next Year … a Huge Winner” Tobin Smith’s ChangeWave

By Travis Johnson, Stock Gumshoe, April 5, 2008

This one was sent in by a reader earlier today, so I thought I’d quickly get out a note about … this will be shorter than your average Gumshoe writeup, but hopefully still packed with pithy comments and one interesting stock idea.

This is from Toby Smith for his $79 ChangeWave service, and it’s for a specialty chip maker.

Here’s the basics:

This is a company that has bet big on Blu-Ray and should benefit from pent up demand now that there is a single HD standard for DVDs and sales should pick up. He said the ChangeWave alliance, which is a market research group of people who get his newsletter for free in exchange for answering surveys, notes that 44% of people are planning to buy a Blu Ray player this year.

He compares the pent up demand to the iPhone, which helps to get your attention regarless of whether or not it’s relevant.

And he says the shares are picked by analysts to go back up to about $40 — but that he predicts a price of $75, which would get it back to it’s high from last year.

The PE is very low, according to Smith — trailing 10, forward PE of 8.

So what do we have here?

Well, I can’t give you a lot of backup research here, but it is a company I’ve been interested in since they fell from grace — one hates to buy a stock that has cratered so badly, but on the flip side the temptation to buy an outright bargain is difficult to resist. I’ve been fighting those two angels on my shoulders for several months without making a move.

This stock is, methinks,

Sigma Designs (SIGM)

They are indeed the dominant chipmaker for Blu Ray at the moment, though I don’t know how stable their leadership position will be as Blu Ray moves into the mainstream and dramatically picks up volume. Suppliers probably weren’t all that excited about competing for that business until recently, but I bet they are now.

Sigma’s other big capability is in IPTV chips — internet protocol television is making some headway in the US, but is really an international story as premium TV networks build out based on this system instead of on older cable or satellite paradigms. If countries need to build up infrastructure, why not just build up high speed internet and use IPTV to deliver television over that same network? That’s a simplification, of course.

So Sigma is the company that makes the specialty chips for these two video applications, Blu Ray and IPTV. They’re not the only one in either business, but they do have a good position. And they are being picked here by Tobin Smith — I know they’ve also been picked in the past by the Rule Breakers folks at the Motley Fool, though I don’t know at what price (or if they still like it).

Is it worth your money? I don’t know … but the shares are down at $23, a dramatic fall from $73, and they are profitable. Maybe worth investigating … and if you do so, please share.

And enjoy the rest of your weekend!


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25 Comments on "“By This Time Next Year … a Huge Winner” Tobin Smith’s ChangeWave"

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Dividends4Life
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April 5, 2008 10:03 pm

> One hates to buy a stock that has cratered so
> badly, but on the flip side the temptation to
> buy an outright bargain is difficult to resist.

I’ve fought that battle before and when I lose it is usually twice (the battle, then the stock),

Best Wishes,
D4L

Rollin Agin
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Rollin Agin
April 6, 2008 9:33 am

Sigma Designs is a Motley Fool “Rule Breaker” recommendation.

Wayne
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Wayne
April 6, 2008 10:22 am

Thank you, Gummy – for responding – and so quickly! I’ve not started further investigation – but if I turn up anything, I will definitely share. Thanks again!

Wayne

spreadtrader
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spreadtrader
April 6, 2008 10:43 am

(SIGM) looks like a technical “buy”. Key Fibonaccii support is holding at 78% on the weekly chart and the daily chart just filled a gap at 24.12. Momentum indicators are divergent and a close above 24.12 would be mildly bullish, with a close above 27.25 even better. Risk it to a close no lower than 20.40, but study your fundamentals first.

Marco Polo
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Marco Polo
April 6, 2008 10:56 am

SIGM is a top Gilder pick. George Gilder was an all-star technology picker in 1999, with an averaged return of about 250% for the year. His big problem was never selling the stocks when the market tanked. Long and short of it, he understands technology well but he’s no good with when to buy and sell. He’s still very optimistic about SIGM’s prospects. His portfolio is still down 90% or so from it’s top in 1999 and I should know…I was along for the ride as a newbie and followed his recommendations faithfully, both up and down!

farley 5
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April 6, 2008 11:51 am

SIGM is a real stinker. It is performing worse than the equal weighted S&P and getting worse, trading worse than Semiconductors and getting worse, and trading under the trendline. A look at the P&F chart clearly shows supply is in control. Stochastics 12,5,10 shows it is approaching overbought territory. “Story Newsletter writers” get hooked on the story and never check supply and demand. Why is that?

Robert
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Robert
April 6, 2008 12:56 pm
SIGM is just starting to form a bottoming pattern, or a consolidation before turning lower. It is not close to penetrating its down-trending trendline, not anywhere near its 50 or 200-day moving averages (both of which are showing no signs of leveling off), and any substantial volume is on the downside. It seems to still be in its distribution phase. There are MANY more stocks out there that are already trending higher and with very favorable charts. I would wait longer to see a well-confirmed upswing before buying, and I can’t wait for that to happen with all the ripe… Read more »
Mike
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Mike
April 6, 2008 7:39 pm

Gumshoe, thanks for the great job & does anyone have any idea what the 3 stocks are Brian Hicks is teasing in his 20 Trillion Letter? He says these 3 companies are drilling for oil & gas in the Bakken Basin of N. Dakota & Montana.

Bruce
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April 6, 2008 9:07 pm

I’ve been part of Tobin Smith’s panel of experts for several years. In exchange for our expertise (I use the term advisedly), we enjoy subscriber benefits. This stock IS SIGM. It’s down 59% since 12/28/07. Will it go back up? I dunno, but Tobin makes a good argument that it should.

Bruce
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April 6, 2008 9:12 pm

For Mike’s benefit —
I’ve identified five companies drilling in the Bakken Formation. They are EOG, WLL, BEXP, CLR and ABP. Also a trust (Canadian, I think) called Enerplus Resources Fund (ERF). I’m pretty sure that BEXP is one of Hicks’s three. Not sure about the others.

Pete Ewing
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Pete Ewing
April 7, 2008 12:41 am
I own Sigma. They are the dominant Blu Ray chip maker. Blue Ray sales are projected to increase from 500,000 units last year to 10 million in 2010 so even if Sigma loses some market share their growth should still be pretty substantial. With a forward PE of 9 and PEG ratio of .28 could be a lot of upside in this stock but may need some patience. Sigma said the downward adjustment to its 2008 forecast was due to an excess of inventory at its largest customer, Motorola. Sigma provides the chips that go into Internet Protocol TV set-top… Read more »
Jeff
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Jeff
April 7, 2008 5:54 am

Blu-Ray in its current form is not going to be the big seller one might expect. A new standard is in the pipe that will make these old devices obsolete and non-compatible with future media.

Junhao
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Junhao
April 7, 2008 6:57 am
Hi gumshoe Would you be able to find out what this 2 company this newletters is selling about ?? Thanks alot ! Rgd Joshua My name is Charles Delvalle and I’m a market analyst with Investor’s Daily Edge, one of the fastest growing investment newsletters in the world. Investing has been my passion for more than ten years. … [edited — thanks] … Considering this small explorer had the leadership… the right plan… and a promising property, I decided to dig even deeper. That’s when I discovered that they already had nearly 73 million ounces of silver on the books,… Read more »
Junhao
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Junhao
April 7, 2008 7:02 am
Hi Gumshoe , this is the second newletter , just wonder how much you could dig further in to. Really look forward to your comments. Rgd Joshua Let Me Lead You to the Opportunities of a Lifetime The market that I have studied almost exclusively for 15 years… the one that has rewarded me with wealth beyond my dreams… is the market for precious metals, natural resources and energy. The ongoing bull market in commodities and natural resources will continue to be one of the greatest financial mega-trends of the coming decade and beyond. But I can already guess what… Read more »
Junhao
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Junhao
April 7, 2008 7:03 am
I have teamed up with Investor’s Daily Edge, and publisher MaryEllen Tribby to create an investment research service that shares all the secrets I have learned over a decade of successful natural resource investing. These strategies and ideas have helped me to generate thousands of pecent gains on my investments over the years. The service is called, Resource Windfall Speculator, and that’s exactly what you can expect in the years ahead… windfalls! Month after month, I will share with you opportunities to buy early stage positions in the world’s most promising exploration companies with just a click of the mouse… Read more »
investorgirl
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investorgirl
April 7, 2008 10:49 am

I SURE HOPE YOU PAID FOR THIS ADVERTISEMENT, AS I AM APPAULED YOU HAD THE NERVE TO TRY THIS. IF THIS IS HOW YOU DO BUSINESS HOW DO YOU EXPECT US TO TREUST YOU?

investorgirl
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investorgirl
April 7, 2008 10:50 am

I SURE HOPE YOU PAID FOR THIS ADVERTISEMENT, AS I AM AMAZED YOU HAD THE NERVE TO TRY THIS. IF THIS IS HOW YOU DO BUSINESS HOW DO YOU EXPECT US TO TRUST YOU?

Seve
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Seve
April 7, 2008 11:25 am
In my mind Sigma designs is one of the more interesting tech companies trading today. The stock has recently been under a short attack as these guys sniffed out that there was a small problem with the 4th quarter (the stock is on a January fiscal). The problem with the quarter was that their biggest customer had over-ordered chips in the previous quarter and so Q1 was going to be $14MM light—not that big of deal for a company that is going to do $300 to $350MM this year up more than 60% from last year. Sigma sells into the… Read more »
Steve Mitchel
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Steve Mitchel
April 7, 2008 5:24 pm
As an Alliance member, I can tell you this stock is on his open buy list since 1/29/07. he recommended selling 25-50% of your position in 12/3/07. Tobin’s 2/19/08 statement says he consider’s the share price a screaming buy under $45! His current take is the stock price suffered as Sigma guided for a 2008 that will be back-end laoded because Motorola ordered too many set-tops for AT&T in recent months. He feels this should correct itself in about a quarter, with yr. end guidance in the $300 – 350 million range. He feels Sigma is well positioned in not… Read more »
momz_pennyz
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momz_pennyz
April 8, 2008 12:24 am
WOW!! That Junhao is one long winded full of vaseline and baby oil salesman! A carbon copy of the multitude of others out there selling a teaser to riches for a price. A price to people who got money to burn or just throw it on a hyped up hunch by a self proclamed big winner. Did ya think he would throw a bone out there with some meat on it at a share price we poor folks could afford? NOT! and then ramble on. I forgot to mention he wasn’t even on the subject at hand if my memory… Read more »
Steve Mitchel
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Steve Mitchel
April 8, 2008 11:17 am

Tobin just posted his revised buy recommendation on Sigma – “buy up to $25”

SLM

Randy
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Randy
April 8, 2008 12:19 pm

Wow, now we’ve got investment newsletter free advertising within the gumshoe responses. Hmmmm, very interesting…this was upposed to be a response to buying Sigma, where does the silver market fit in here?

Gravity Switch
Admin
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April 8, 2008 12:23 pm
Hi folks — I’m going to go in and edit Junhao’s submissions, but they weren’t intended to be ads, they were teasers he wanted me (or others) to look into. I’m only editing them because I prefer not to have folks violate copyright by posting full letters or ads in this space. If you have a teaser to submit for “Gumshoe processing” please either email or post a link, post some “clues” or extracts, or email the full ad letter to ilovestockspam@gmail.com, please don’t post the full text of someone else’s stuff unless you have their permission. Thanks!
A. Nony Mouse
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A. Nony Mouse
April 10, 2008 6:33 am

I’m a former Change Wave subsciber. IMO Tobin Smith is Jim Cramer on Prozac.

who noze
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March 5, 2009 10:40 am

when tobin smith says he is backing up his truck to load up run for the hills because he probably w// a flat tyre

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