With our indicators still in neutral, just to keep things interesting we are doing something new today, on two scores.

For the first time we are recommending that you take a position in a stock, as distinct from an option. And we are placing that position in the second “pot” of our Three-Pot trading system even though Pot 1 is now empty.

That’s because we want to save Pot 1 for options trades, and specifically for options trades where our indicators have given a strong, unambiguous go-ahead signal.

One advantage of having a second pot is that we can recommend positions other than options, or even, occasionally an option position where our indicators haven’t flashed a clear-cut positive signal, without jeopardizing your overall gains. Remember, each pot should have one-third of the overall amount of money you have allocated for your speculative trading.

“Stock of the Year”

Now for today’s recommendation, which we posted online earlier today: a long position in the stock Cypress Semiconductor (NYSE: CY). One thing we didn’t note in the Alert, and are noting here, is that you should purchase the shares using margin, with the amount you shell out on margin equal to one-third your trading capital. We will calculate the return on the investment accordingly.

Why did we pick Cypress? If you also read AT’s sister publication The Complete Investor, you know we recently recommended Cypress as a strong potential comeback play. In fact, it was my choice for Personal Finance’s “Stock of the Year” prediction for 2018. For AT, though, because this is a speculative service, we do not expect we will hold onto our margined position for the entire year.

In picking Cypress for those other publications, I stressed the company’s leadership role in producing the connectors that will be critical to many of the developments affecting growth in technology. Now further adding to the stock’s appeal is that connectors and related devices like microcontrollers and sensors haven’t been affected by the potentially game-changing flaws recently publicized in the design of CPUs and possibly other semiconductor-related products central in technology.

Benefiting from CPUs’ Flaws

Unlike these products, Cypress’s offerings won’t need to be redesigned. Moreover, a lot of technology like AI and IOT may need to be re-worked so as to include many more connectors in order to depend less on more diverse chips like CPUs and possibly GPUs, expanding the market for connectors.

With a free cash flow yield of nearly 7% and a rock-bottom PEG ratio of only 0.7, Cypress is dirt cheap by any measure. As a bonus, your margin interest, depending on how long we hold the stock, may be paid or partially paid by the stock’s very decent 2.65% yield.

Please feel free to contact us with any questions about either our Three-Pot system or about Cypress itself.