The user-programmable integrated circuit allows electronics manufacturers to fine-tune its properties to suit themselves. Such devices were pioneered in 1984, by a San Jose, California outfit that still sells a lot of them.
Altera Corporation (NASDAQ: ALTR) makes high-density programmable logic devices and associated development tools. PLDs are integrated circuits that clients can program themselves, using software that Altera also provides. This allows clients to provide their customers with special-purpose chips that cost less than equivalent custom-designed devices. Altera's circuits are used by thousands of customers in computing, telecommunications, industrial, and automotive applications. Clients include Honeywell (NYSE: HON), Johnson Controls (NYSE: JCI) and Motorola (NYSE: MOT).
The stock has been a steady gainer, since mid-August, moving higher in response to such issues as solid third quarter revenue guidance ($319.7-329.3M vs. $325.1M consensus) and last week's upgrade to overweight by Morgan Stanley. In fact, the price is cycling through a positive eight-week trading channel.
It is currently consolidating at the base of that channel, suggesting the potential for another swing back toward the top. Correspondence of the stock's 30-day moving average to the channel base backs the rebound notion.
Brokers recommend the issue with four "strong buys," five "buys," 15 "holds" and a "sell." Analysts see a 32% growth rate, through the next year. The ALTR PEG ratio (1.40), Price to Free Cash Flow ratio (33.26), Operating Margin (24.17%), Net Profit Margin (26.72%), Return on Assets (16.37%), Return on Investment (22.63%), Return on Equity (23.89%) and Revenue per Employee ($129k) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $17.51 and $26.24. A stop-loss of $21.25 looks good here. Note that firm is expected to report Q3 results in early November.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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