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Maybe This Is Rocket Science...

Written by Brian Hicks
Posted January 6, 2006

It happens every day now. Brian Hicks, head honcho here at Wealth Daily, sends me an instant message on my computer.

The dialogue box pops up "New 52-week high for AMD!"

Well, I can't say I'm surprised by AMD's favorable performance since I first recommended it two months ago.

But I am surprised at the rate of its rise.

Remember, I set my price target at 39 bucks per share back when AMD was at 24.

Now check this out:

 


 

 

If you bought in when I recommended it, you've made almost 10 dollars per share by now. That's a gain of more than 40%, and there are no signs of it slowing down.

Furthermore, the primary reason for my confidence in AMD's erstwhile undervaluation was the blind eye being turned to the company's China operations. AMD's China presence entails R&D, marketing, and partnerships with domestic manufacturers.

Now, China's third-largest computer maker Tsinghua Tongfang has agreed to begin selling nine new commercial and consumer computers that use the AMD Athlon 64 X2, the AMD Athlon 64 or the AMD Sempron processors. With China's booming computer market, we know what that partnership will mean for AMD...Up, Up, and Away!!!

We are in the process of crunching the new numbers for AMD and will issue a recommendation soon as to whether more of you should get in on this growth. Until then, if you already own AMD:NYSE, hold on to it!

Ready for Another Ride?

You've read about China's recent moves to stake its claim as a champion of 3G mobile phones ("New 'G' on the Block")

Now it's time to stake your claim.

China Unicom, the mainland's second-largest service provider, has a unique place in the market due to its offering of both GSM (2G) and CDMA (3G) technology. This includes a dual-use unit called the CECT CoolPAD 728 smartphone, which will be a standard for China's 3G transition.

Before I say another word, let me throw this fact at you: China has more cell phone users than the US has citizens. To say the mobile phone market in China is big is like saying Bill Gates is rich. It just doesn't have the effect it should.

But here's my point. If China's cell phone customer base doubled overnight, it would represent less than half of China's total population. In other words, this market still has room to grow dramatically.

And here's how I want you to play it.

China Unicom (CHU:NYSE) is the only Chinese cellular operator licensed for a full array of applications, including VoIP (for toll and international calls) Internet, broadband, and 3G.

In the near term, I expect China Unicom to benefit as one of the first firms to be given 3G licensing by the Chinese government. Its position in the vanguard will give it a head start over other mainland operations as multinational corporations like Nokia, Motorola, and Siemens scramble for a chunk of the 3G handset market.

Its versatility from previous experience in diverse telecom scenarios is one of the primary reasons for the government's faith in China Unicom to advance 3G, and one of the primary factors in its anticipated success.

In recent years, intense competition has caused a decline in China Unicom's average revenue per unit, but a strong start in the nascent 3G arena will re-establish a competitive edge.

China Unicom is currently partnered with such heavy hitters as Sun Microsystems, Qualcomm, and South Korea's SK Teletech in content development for the next generation of mobile phones.

Okay, CHU has been trading in a range for the past year-and-a-half. Currently, shares trade for about $8.50. Take a look:

 


 

 

But based on recent developments, I think it's high-time for a breakout. And I'm recommending you buy shares at current levels.

Here's the skinny:

China Unicom has rock solid fundamentals. Trading at a p/e of 19, a market cap of $10 billion and with $1.8 billion sitting in the bank, I see very little downside at current levels. My 12-month target for CHU is between $11 and $12 a share.

- Sam Hopkins


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