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Readers' Mailbox: Cirrus Logic, What's Up With Europe, And Where To Find Fat Dividends

 June 05, 2012 12:58 PM
 


(By Rich Bieglmeier)

The information in this article is iStock Analyst take on different stocks. It is not intended to be advice, recommendations or endorsements of any investment or investment vehicles. Investing involves risk and you should consult with a financial professional before investing any money.

Hello Rich, What do you think of CRUS (Cirrus Logic)

Thanks

Kris

With the stock market running unopposed to the downside right now, growth stocks tend to fall out of favor quickly. That hasn't been the case for Cirrus Logic Inc. (CRUS). That's probably because CRUS's fate is tied directly to Apple Inc. (AAPL).

[Related -Fusion-IO, Inc. (FIO): Can Fusion-IO Q2 Results Cheer Street?]

Roughly 70% of Cirrus's revenues come from providing AAPL with components. So, as Apple goes, so goes Cirrus Logic.  Apple is expected to be on the verge of some amazing launches which could act as a catalyst for both stocks. The word is the TV is about to be revolutionized.

It does appear that CRUS could challenge its 50-day average of $25, but that is about as low as we think Cirrus will fall without a full-blown crisis that crushes everything. Of course, if Apple ever dropped CRUS as a supplier, the stock would wither like a grape in the sun.

Rich, considering all the turmoil in Europe what is your opinion on buying the Proshares Ultrashort MSCI Europe ETF (EPV)?

[Related -Google Inc (GOOG): Why Nest Labs Deal Is A Wakeup Call For Apple Inc.?]

Thanks,

Jered

Considering how messed up the EU is right now, shorting the region makes sense, and with ETFs, you can choose to be more country specific if you wish. Unlike EPV, specific country funds don't offer two to one leverage.

In case you are unfamiliar with ProShares UltraShort MSCI Europe, the ETF seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the MSCI Europe Index.

It does look like EPV could be on pause right now. However, during the height of last summer's Greece crisis, the exchange-traded-fund hit a high of $68.98. The debt plague is spreading, and Spain, this summer's EU villain, has a GDP five times larger than Greece.  

If you can get another crack at it $45, you might consider taking advantage of it. A close below $42.50 and we would seriously consider getting out.

Pfizer Inc. (PFE), a sensible dividend play and capital gain for someone two years away from retirement?

Thanks,

Tom

If dividend tax-rates jump as they are scheduled to do on January 1, 2013, iStock isn't too sure how attractive dividend stocks are going to be. Publicly traded companies may opt for share repurchase programs over cash distributions.

While we like Pfizer, we would probably look elsewhere if dividends are important for you Tom.

As the cost of living continues to go, up and up and up, especially if the Fed decides to print mo' money you might want to focus on companies with an unbroken streak of raising their payout, a test Pfizer failed.

S&P has a list of 50 stocks they call Divided Aristocrats. The exclusive club consists of companies that have 25 consecutive years of increased cash payments to shareholders. Think of all the crazy things that have happened during the past quarter of a century, and yet, every one of these companies continued pay investors more, year after year.

A rising income stream during retirement – a long, healthy one we hope - is essential to keep up with gas, food, electricity… prices marching higher.


The information in this article is iStock Analyst take on different stocks. It is not intended to be advice, recommendations or endorsements of any investment or investment vehicles. Investing involves risk and you should consult with a financial professional before investing any money.

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