This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.
George Putnam is the newsletter advisory industry's leading authority on distressed stocks and turnaround situations. In his The Turnround Letter, he looks to semiconductor firm Teradyne (NYSE: TER), his top 2009 pick.
"Founded in 1960, Teradyne is the leading maker of automated semiconductor testing equipment. It also produces testing equipment for circuit board assemblies, aerospace and defense instruments, and automotive systems.
"The current short-term prospects for the semiconductor industry are weak, and so many of the chip stocks are down hard. Testing is a key element of semiconductor production, and so the testing equipment producers will prosper when the chip makers rebound.
"Teradyne has been the dominant player in the semiconductor testing market for quite a while and over the last couple of years the company further solidified its leadership position by acquiring competitors and buying back stock.
"However, the balance sheet remains very solid with little or no debt. And even though financial results have weakened, the company is still producing decent cash flow. Many of Teradyne's remaining competitors are not as well off.
"Teradyne could further boost its market position by buying more competitors -- or just watching them go out of business. We view Teradyne as a very solid company whose stock should soar when the semiconductor industry begins to rebound. We recommend buying Teradyne up to 6."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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