Bank It or Tank It: CREE

Bank It or Tank It: CREE

Cree Inc. (Nasdaq: CREE) has a special place in my heart. It was the first company I put together an in-depth research report on.

It was back in my college days, and my team was tasked with finding a valuation for Cree: What was the company worth?

A lot has changed in the stock then, but I consider it my first taste of what investing in the markets is really like — a roller coaster ride.

This is a company that used to just focus on lighting products. Pretty boring stuff, but the government was writing regulations that would eventually buoy the company’s LEDs bulb sales.

That was years ago. Today, Cree has done the impossible and made the jump from a boring light bulb company (though it still offers bulbs) to a high-tech semiconductor company. In 2015, Cree decided to separate out its semiconductor business — Wolfspeed. Since then, semiconductors have grown to become the largest area of revenue for the company.

It’s a wildly different industry that’s gained the stock extra attention over the past year.

In today’s video, I’ll break down everything you need to know about Cree and its new look. From its fundamentals and sentiment to what the price chart is telling us to expect over the next 12 months:

Today, We Expect the Unexpected

Back in college, when we put our report together on Cree, it was just before the 2008 financial crisis.

We turned over every rock in the company’s financials, had multiple calls with management, looked at competitors, created a pro forma financial analysis spreadsheet and more.

You name it … we did it to determine the valuation of this company.

When all was said and done, we unanimously rated the stock a “buy.”

Based on our analysis, it was an undervalued stock that was for sure heading higher.

But it didn’t.

Instead, 2008 hit and shares plummeted 60% right around the time they should have been trading at our one-year price target.

I remember thinking we must have missed something.

Turns out I was right.

The major financial crisis wasn’t something we could see from looking at the balance sheet of Cree. All the data, the financials, the pro forma valuation, valuation metrics — it was all backwards looking.

This information covered what had already happened. We are taking old information and projecting it forward, expecting the same type of environment to continue.

It helped shift my whole mindset on trading, and now I focus on proven strategies that deliver consistent gains regardless of the stock market environment.

Whether we are in a multi-year bull market or experiencing another global catastrophe, we now know how to find profitable trades.

And we do it with options.

This has been a pivotal tool to timing the swings in the market over weeks and months, not years. Now I’m helping everyone  learn how to master options with my new weekly letter, Weekly Options Corner.

It’s completely free, but only available to those looking to master options. If you want to learn how to trade options from the ground up, you can click here to join.

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Chad Shoop
Chad Shoop, CMT

Editor, Quick Hit Profits

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