Buy because of earnings, not because of trade deals.
Last night we had a monster quarter from Broadcom (AVGO) and all I can say is Hock Tan is back. His curious amalgam of hardware and software is working. His integration of CA is superb.
But most important, networking is on fire - the internet of things and that's so terrific for everyone from Cisco (CSCO) to Dell (DELL) to VMWare (VMW) and, of course, Amazon (AMZN) .
The quarter was vintage Hock with a clear vision and lots of analyst congratulations even as he said that cellphones are still real weak. That's okay, nothing new. I just liked the fact that he said the rebound for chips is upon us, which allows you also to buy Western Digital (WDC) , Micron (MU) , Texas Instruments (TXN) , Analog Devices (ADI) and NXP Semiconductors (NXPI) . Best of all the equipment cycle is back and that checks the box that Lam Research (LRCX) put in saying that the return is here and it is time to buy a fifth of the company in the open market.
Needless to say Broadcom is still cheap. Lam is still cheap. Micron is still cheap. And the VanEck Vectors Semiconductor ETF (SMH) is worth buying.
Meanwhile, I keep hearing that there is an imminent China trade deal.
I do not think that's the case. There is still much to be worked out when it comes to enforcement and removal of the current tariffs which the administration is LIKING more and more. So if you are buying, buy where the earnings are. That's the ticket.
(Cisco, Amazon and Lam Research are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells CSCO, AMZN or LRCX? Learn more now.)
