Tech Stocks Gain Ahead of Apple (AAPL) Earnings

Ian Wyatt | Oct 19, 2009 5:15pm EDT | Comment

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All the major indicies are pushing 1% gains after the weekend break, despite mixed results in the early morning. As is usually the case, the Russell 2000 is leading the way up, adding 1.08% with 1285 stocks advancing and 645 declining.

Technology stocks rose Monday as the market prepares for more earnings reports. Apple (Nasdaq:AAPL) is expected to beat analyst EPS estimates of $1.42 when the company reports after the bell. Chip-maker Texas Instruments (Nasdaq:TXN) is also on deck. I'm looking to Texas Instruments for more signs that semiconductor demand is increasing for businesses and that this recovery has legs.

Last week I looked at two small-caps on the Top Daily Gainers list that are worth taking a second look at: Autochina International (Nasdaq:AUTC), and Brooks Automation (Nasdaq:BRKS). Autochina International is a recently listed stock that finances commercial vehicles and operates a network of after-sales service stations in China. The stock added another 10% today.

As you know, I'm bullish on Chinese stocks in general, because the Chinese government has the cash on hand to support its economy. And China has shown that it will put that money to work. I have several Chinese stocks in the SmallCapInvestor PRO portfolio that are showing excellent returns.

Auto sales rose 78% to 1.33 million in September. That makes China the biggest auto market in the world. No doubt Autochina International is taking advantage of this trend.

Brooks Automation, the semiconductor automation equipment manufacturer, held its gains after gaaping up on Friday. That's a good sign, and it's up another 5% today. Brooks Automation is benefiting from improving sales, and bullish comments out of Intel. I'd expect more gains if Texas Instruments also signals good times ahead for chip-makers.

While we're on the subject of chip-makers, a semiconductor stock from my special report, The 10 Most Profitable Small Cap Stocks for 2010 is up 58% in just 6 weeks.

The company makes specialized semiconductors and microprocessors. In their Q2 conference call, management cited increasing customer orders and inventory replenishment. Some of their customers include tech giants Texas Instruments, Fujitsu, and IBM. To find out more about this company and the other featured stocks, get your copy of The 10 Most Profitable Small Cap Stocks for 2010 by clicking here.

We're seeing some nice gains in the Russell 2000 today. Sprint Nextel (NYSE:S) is buying small-cap affiliate iPCS (Nasdaq:IPCS) for $831 million. The deal should settle a number of long-standing legal issues between with iPCS, and shareholders of that company are enjoying a nice 30% pop.

Deidrich Coffee (Nasdaq:DDRX) is up 17% on essentially no news. The company has been on a tear this year after focusing in on expanding its K-Cup line. You know, these are the single-serve packs that fit with Green Mountain Coffee Roasters (Nasdaq:GMCR) Keurig brewer. Deidrich is up over 2,300% in the last year and investors on both the long and short side don't know what to do. Can't say I'd buy the stock now, but this is a great example of the gains you can make with small cap stocks.

I outline many of the techniques I use to find the best small-cap stocks in my book, The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks. You can get your copy of my book at Amazon.com by clicking here now.

Ian Wyatt is the Chief Investment Strategist of SmallCapInvestor PRO (http://pro.smallcapinvestor.com) and author of the book, "The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks." You can learn more about his book at http://www.smallcapbook.com.

About the Author
Ian Wyatt is a co-founder and President of Business Financial Publishing and the Chief Investment Strategist and Publisher of SmallCapInvestor.com and SmallCapInvestor.com PRO. Read More