Revisiting a Chip-Related Play

I recommended trimming several positions in March, including semiconductor capital-equipment manufacturer Applied Materials (AMAT). The reason was the outperformance of the shares since my initial recommendation. AMAT shares were up 30% and it was prudent to sell half the position while letting the other half ride. Ringing the register is never a bad thing when profits are at hand, but it's also nice to leave exposure if the fundamentals improve further.

I've been keeping an eye on what's been going on in the semiconductor capital-equipment industry. We recently learned from SEMI, a group that collects and publishes industry figures for semiconductor-capital equipment, that preliminary bookings for February continued the strength seen in recent months. That led to an industry book-to-bill ratio of 1.1; generally, anything above a reading of 1 is positive. To be fair, billings have trended downward over the last few months just as bookings have climbed. To me, that reflects weaker bookings in October and November. ...309 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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