Let’s talk about Avago Technology.

You know its roots, going all the way back more than 50 years to Bell Labs and Hewlett Packard (HPQ). It’s the 9th largest semiconductor company, not counting memory. The company is in the right niches of the industry, and last year made two very smart/strategic acquisitions.

Its core technologies cover fiber optic, LED, LSI, motion control encoders, optical sensors, RF and microwave. End markets include wireless, wire, enterprise storage and industrial -- all the right spots. A line on the company's website says it all: they’ve got sustainable growth, margin expansion and earnings leverage.  I like this stock. I think it’s great, in my mind I think it could go to $93.

Now let’s talk about Weatherford International (FRA:0WE).

It's all about oil drilling around the world, and this is the name that's positioned to benefit big time. I've followed the name for years - in fact, the first time I recommended the stock to subscribers was in 2002 - and we made money. 

But it's been rough sledding, believe me this company was in trouble. It streamlined its businesses, shedding massive head count and business segments. The last one should be done in the first quarter of next year. And it continues to build on its core competencies. 

Last year, its drilling revenue was $4.6 billion: operating margin 25%; evaluation revenue $2.4 billion: operating margin 9.9%; completion revenue $1 billion: op margin 23.9%; artificial lift revenue $2.6 billion: op margin 16.4%; stimulation revenue $1.4 billion: op margin -7.9%, overall amazing -- and they are going to be able to expand them.

Execution has gotten better and better. Here’s one thing you don’t see in this market: insiders buying the stock. The volume has been fantastic lately. Your big test is going to be $25, through there I’m looking for it to go to $29 -- probably higher.
 

DISCLOSURES

Avago Technology (AVGO)

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Family Owns

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Banking

CHARLES N N Y N
MATT N N N N
HITHA N N N N
TRACY N N N N
DAVID N N N N

Weatherford International (WFT)

Owns

Family Owns

Firm Owns

Investment
Banking

CHARLES N N Y N
MATT N N N N
HITHA N N N N
TRACY N N N N
DAVID N N N N

 

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