Raw Greed morning update

Posted on January 24, 2006 , filed under Stocks | Print This Post

Good morning, lets get started. Today I will look at increasing my position in UMC, United Microelectronics Corporation. I read an interesting article on MarketWatch discussing the possibility that foreign markets will continue to outperform the U.S. market.

Here is a quote from the article:

Taiwanese valuations are attractive, as the market trades at one of the lowest earnings multiples ever, and offers a 4% dividend yield. Taiwan’s valuations imply the market, as a whole, has gone ex-growth. Yet earnings growth will surprise on the upside this year. A recommended stock — and a play to the potential return of capital spending in the corporate sector — is United Microelectronics.

Overall I believe Taiwan’s market has been held back mostly due to the political instability of the country. Scandals over local elections and a tense situation with China have prevented Taiwan’s stock market from rallying with the rest of Asia. In particular I believe Taiwan should follow in the footsteps of Korea, a market that I believe is overheated. Taiwan shares many of the same technological strengths as Korea in semiconductor and display technologies, two key categories driving strong growth in the technology sector in Korea. In the case of UMC, it’s hard to argue against the near 100% utilization rate for the company. I expect to see UMC jump up in 2006, driven by strong utilization, growing revenues from a shift to 90nm and 80nm processes and strong growth from the broad market in Taiwan. I will try and purchase another 5000 shares of UMC at under $3.10 today.

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