The cyclical nature of the chip business makes both earnings and stock prices very volatile. The group has been in a downturn for several quarters now. But because the group's bellwether, Applied Materials, has not warned of disappointing numbers in its quarterly earnings report due out next week, investors are optimistic that the company will meet estimates, said Morningstar stock analyst Jeremy Lopez. If Applied Materials does well, the other companies should, too, he said. Though there's still downside risk in all of these stocks, it's also true that if investors dally, they may miss an upturn in the sector, Lopez said.
Investors just have to be committed for a long time.
Discount retailers shot up after April same-store sales, or sales at stores open at least one year, came in a bit stronger than expected. Clothing retailers in general have had a tough time in recent quarters. Kohl's has done well for several quarters, because it skillfully mixes its product lines, said Morningstar stock analyst Mike Porter. Same-store sales did not increase, however, at clothing retailer Gap Stores GPS . Gap also said earnings in the April quarter will come in higher than forecasts.