Break My Rules Buy a Semi

Heading into the weekend I have a thought or two. First,learn something from this yhoo deal. Last nite on Fastmoney the pundits were talking about GOOG suggesting it was cheaper than YHOO with the sell off after earnings. That is only a partial truth. P/E is only one measurement of value and yes on this comparison goog is cheaper. By any other metric it is much more expensive; price/book, price/revs, price/you-name-it. P/E is a simple way of trying to make all stocks equal and blanket assess valuations. It is also useless without context such as market valuation and balance sheet considerations. GOOG is pushing the limits of size for any company and trading 15x + revenues is ridiculous and the p/e is more a function of creative accounting than value. GOOG may end up being the greatest company in the world, but at these prices it has to be for the stock to go higher. It is a $150 billion company on $11 bil in current year revs. Instead of treading in these dangerous waters, let's look for opportunity where expectations are lousy and prospects good. That is where risk is diminished and upside equal or better than situations like GOOG. Everyone hates semis since INTC disappointed and as usual the market has thrown out the baby with the bath water. I generally shy away from semis as sellers of commodities but prices in some spots are just too low. Look at OIIM and UTEK. Both companies trade about 1x revs ex-cash and 1.5 x book. OIIM is a fabless semi with a huge amount of patents and great 5 year growth and is trading less than 10x forward earnings. With products for minimizing power consumption in computing and LED back lighting this company should continue to grow. UTEK sells semi cap equipment for next gen nano fabricated semi products. Trading 15x froward earnings and roughly half of that ex-cash this is a low risk play on nano, a huge area that for the meantime has been left for dead by investors. Further, when you compare valuations with these companies' larger peers both are cheap on relative valuation metrics and would make interesting acquisition candidates. I dwell where others don't to mitigate risk as there are discounts in out of favor areas as opposed to premiums like in the GOOG complex. In my opinion OIIM has a significantly better chance to double from current prices than goog and significantly less risk. Unlike GOOG where the future hope is Content being king, I say Context is king. The market uses single valuation metrics like p/e as a way to distort this reality, don't fall prey. Good weekend to all.