Ambarella (AMBA): Behind GoPro’s image quality

By Paul Goodwin, Chief Analyst, Cabot China & Emerging Markets Report
From Cabot Wealth Advisory 9/30/14 Sign up for Cabot Wealth Advisory—it’s free!

My pick today is Ambarella (AMBA), which was also featured in Cabot Top Ten Trader on September 8. One look at the chart will probably tell you why I like this stock. AMBA has been in an uptrend since early May and has been exceptionally strong since early August. (The decline during July was a classic shakeout that wrung out many who bought near the interim top at 34.)

The story behind Ambarella is simple. If you love GoPro (GPRO), the dominant maker of rugged action cameras and mounts, but don’t want to jump into a stock that has more than doubled since August, AMBA makes good sense.

That’s because Ambarella makes the high-definition image processing semiconductors and software that create and publish the HD videos and stills that make GoPro cameras so attractive. And just for good measure, Ambarella’s chips also power the products of DropCam, GoPro’s biggest rival.

AMBA isn’t what I’d call a perfect setup. It’s been taking off with such power that a correction looks inevitable; after all, stocks don’t go straight up for long. But the stock put in a nice long base during the first seven months of 2014, so it has a good foundation for its advance.

Just try to buy on a pullback of a couple of points and keep your stops in good working order. For more information, click here.

Company Details

Ambarella (AMBA)
3101 Jay Street
Santa Clara, California 95054
408-734-8888
www.ambarella.com
Index Membership: N/A
Sector: Technology
Industry: Semiconductor Equipment & Materials
Full Time Employees: 493