Monday, November 20, 2006

Sparky News

Today was a busy day for stocks in the Finance Wonk Buy List.

Apple Computer has all but verified the upcoming iPhone (also here) and the buzz is great. Just this week, the Taiwanese financial daily, Commercial Times, reported that Taiwan-based Hon Hai Precision Industry Co. Ltd. (Taiwan:2317.TW - News) is building the iPhone. Meanwhile fairly solid rumors say Broadcom will be providing the codec chips. I was an engineering grad student alongside many of the founding members of Broadcom while they were starting up (and almost wound up a member of the group working with Henry Samueli that founded the company, darnit) -- but I'm not saying that I've heard anything from the horse's mouth because that might get someone in trouble (see the bit about the apple lawsuit a bit further down).

At this point I almost worry the buzz will be too much for the phone. It will be hard for the iPhone to live up to the hype, but a solid design will truly add a lot to the companies bottom line. Right now with the recent runup AAPL stock is about correctly valued for a rosy future. If the iPhone is anything other than a blockbuster it might be time to sell on the news when the iPhone comes out. I'll be monitoring the situation closely.


IPSCo Steel had a great day. Up 6% based on the buyout of Oregon Steel by Evraz (after I recommended again last thursday that people should get in). This sparked a revaluation of many steel companies based on potential buyout prices. I think the jump is probably getting a little ahead of the market, so I sold a few covered calls at out-of-the-money strike prices. [This means that if IPS doesn't keep climbing pretty steeply I'll collect a premium and still hold the stock, and if IPS continues jumping steeply I'll be forced to take profits at a good price.]

I still think IPS is a good buy at current prices or thereabouts, I just don't expect it to get into triple digits before next calendar year.
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