Author: Joseph Agresti
Covestor model: China & India
Disclosure: Long GTAT
Looking forward to the second half of the year, I see opportunities in all global equities. Current US Treasury yields are far below historical inflation trends meaning bonds will eventually under perform. A transition to equities makes sense as the current SPDR S&P 500 Index (SPY) ETF is yielding 2%. The risk/reward for holding bonds in a retirement portfolio is probably at the worst point it has ever been in my opinion.
For those who have an appetite for risk, I believe allocating some part of your investable assets in GT Advanced Technologies (GTAT) is a sound strategy to position your portfolio for potential capital gains. A maker of equipment for the solar, LED and emerging technologies industries, the company is making money hand over fist while others in the industry such as MEMC Electronic Materials (WFR) struggle to survive.
It is my belief that developed countries will continue to look to alternative energy as a way to become energy independent–thus creating a healthy and lucrative market for GTAT and its customers. Trading at less than 5 times forward earnings, I believe the stock is undervalued and in a different market could be valued as high as 18 times forward earnings, giving us a price of $21.6 per share.