Wyatt Research Week in Review: May 31-June 6

The semiconductor industry saw a serious shakeup this week, with Intel (NASDAQ: INTC) agreeing to buy fellow chip maker Altera (NASDAQ: ALTR) for $16.7 billion.

The most expensive acquisition in Intel’s history might be the boost the company needs to compensate for its sagging PC division, which saw revenue decline by 8% year-over-year last quarter. The purchase of Altera – which specializes in programmable chips that allow for post-factory customization – will allow Intel to expand its more profitable data center segment.

But Intel’s deal wasn’t even the biggest acquisition in the semiconductor space in the past two weeks. That record belongs to Avago Technologies (NASDAQ: AVGP), which agreed to purchase Broadcom (NASDAQ: BRCM) on May 28 for $37 billion.

Avago, which is headquartered in both San Jose, Calif. and Singapore, has purchased five companies since 2013. But the Irvine, Calif.-based Broadcom, a leader in the budding Internet of Things industry, is by far the biggest prize.

Speaking of serial acquirers, billionaire media magnate John Malone is making headlines again this week. As I wrote in this space last week, Malone was the driving force behind Charter Communications’ (NASDAQ: CHTR) $55.3 billion acquisition of Time Warner Cable (NYSE: TWC).

Malone suggested that consolidation might be in order between studios and TV channels. Namely, he stated that pay-TV channel Starz – a spinoff of his Liberty Media (NASDAQ: LMCA) – is a potential acquisition target of Lions Gate Entertainment (NYSE: LGF).

“Lions Gate could buy Starz and potentially other free radicals in the industry,” Malone told The Wall Street Journal on Tuesday. Malone is on the board of directors of Lions Gate and owns about 3% of the company.

Malone also raised speculation in his comments of a potential play for CBS Corp. (NYSE: CBS), although he stopped short of implying any specific plans of targeting the broadcasting behemoth.

Merger and acquisition mania shows no signs of slowing down in 2015. The only question seems to be, which industry is next?

On a different note, here are some of my favorite non-M&A articles from the week:

Top 5 Dividend Increases for June – The S&P 500 has returned 93.6% over the last five years. But when you add in dividends, the total return for the index is upwards of 115%. That’s why investors shouldn’t underestimate the power of dividends – especially dividend-paying stocks that consistently up their payments.

Mexican Equities to Benefit from Booming Auto Sector – The Mexican peso is down roughly 16% versus the U.S. dollar over the past year and is trading near its lowest level since the 2008-2009 financial crisis. But growing auto manufacturing prowess and a slew of foreign investments bodes well for future growth in the Mexican economy – and Mexican equities.

What Offshore Drilling Tells Us About an Oil Price Recovery – It’s no secret that the decline in oil prices over the last year has taken a serious toll on oil production companies. But the smaller – yet equally important – platform and rig companies have seen much more pain than their customers. With oil’s slow but steady recovery during the last quarter, seeing what the energy equipment companies have to say is important to understanding where the energy industry as a whole sees its short- and medium-term forecast.

Why I’m Not Giving Up on This High-Yield Coal Investment – The Environmental Protection Agency’s war on coal has led to huge losses in shareholder value for coal companies. But Wyatt Research income expert Steve Mauzy is still bullish on this coal investment, which still yield 9%.

Will a Fed Rate Hike Hurt Stocks? – We’re all watching for the Federal Reserve to tip its hand and reveal clues as to when it expects to tighten monetary policy. The latest consensus appears to be that a Fed rate hike will happen this fall, probably in September. But what does this tell us really? To get out of the market by September? To plan on buying in November? To do nothing?

Do Not Buy Conn’s Stock Unless You Like Losing Money – When you see Conn’s (NASDAQ: CONN) quarterly earnings you will be appalled at how bad the results are. Then you will shake your head as to why the stock is up. Then your jaw will drop when you see the company’s valuation. What you do after that is up to you.

2 Dividend Stocks to Profit from Life’s 2 Certainties – As the old saying goes, the only two certainties in life are death and taxes. But these two certainties have also given birth to highly profitable companies that generate steady profits and pump out reliable dividends thanks to the inevitability of their products and services.

The Best Large-Cap Stock to Play the Connected Home – The best large-cap stock to play the connected-home trend has been around since the early 20th century and came to prominence via an 1885 invention. Get the name here.

5 Big Announcements from Google I/O 2015Google’s (NASDAQ: GOOGL) annual I/O conference had several major announcements, including a new partnership with GoPro (NASDAQ: GPRO) to produce and distribute virtual reality content.

Have a great weekend!

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