We are eliminating one of our banks, as it offers 15% to my one-year target and is overbought on a short-term basis. This is a stock we have traded in and out of successfully on several occasions. I am quite pleased with the recent action - we bought the stock in late October and it has performed quite well. We are also trimming one of our Technology stocks - it reports tomorrow. While I view it as having a little upside in the near-term, it could go either way with respect to the earnings report. Given that it is moderately overbought and offers 30% to my one-year target, I think reducing the position size makes sense.
The Technology stock we are buying is a Mid-Cap. I have followed the company for a decade and find the valuation extremely compelling. Almost 1/2 the market cap is backed by cash and investments. It currently trades at just 20% premium to its tangible equity. The company is leveraged to auto sales (an end market I am increasingly liking) somewhat (18% exposure) as well as other consumer and industrial applications and cell phones. The stock offers 48% to my one-year target. The CEO is getting near retirement age, and I have a sneaking suspicion that the 70% owner of the company might acquire them eventually.
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