RawGreed Requests, WFR

Posted on November 10, 2005 , filed under Stocks | Print This Post

Francisco writes,

WFR? Is there any upside potential?

WFR, MEMC Electronic Materials, Inc. is in a great industry. The company produces wafers for the semiconductor industry worldwide. WFR has risen a little too aggressively for my tastes. I would look at purchasing WFR on a pullback. The semiconductor industry should see a big rebound in 2006, but I expect at least one more pullback to occur. The next generation of low cost HDTV’s and a new DVD format will drive the next cycle of consumer electronics and demand to an all time high. There will be a period when the new technologies are being introduced in 2006 that will allow manufacturers to forecast adoption rates. I would wait until the smaller electronics companies from China and Taiwan start producing these electronics. This signals mass adoption since these smaller players don’t have the enormous budgets or the ability to assume risk like the larger electronics and computer firms. Once we start seeing demand growing from smaller companies for newly designed microprocessors, it signals a new demand cycle. These new chips have higher margins and will increase the profits of everyone in the industry. Wafers are a commodity like steel or wheat. Companies like WFR should benefit tremendously from the full utilization of semiconductor fabricators.

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