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We Told You This Stock Could Double – Now Wall Street Thinks So, Too

We never follow Wall Street's lead. But we're always intrigued when the Big Money crowd picks up on one of our already-existing ideas.

That was precisely my reaction earlier this month when I saw that Wells Fargo & Co. (NYSE: WFC) reiterated its "Outperform" rating on Advanced Micro Devices (NYSE: AMD), and said its target price was $5 to $7 a share – implying a double (the stock closed Friday at $2.54).

If you'll recall, the struggling chipmaker was the focus of our Jan. 7 column "This Stock is a Bottom-Feeder's Dream," recommended by Radical Technology Profits Editor Michael Robinson.

It's pretty unusual for a big institutional researcher like Wells to project such a hefty gain for a company with that large of a market cap (not quite $2 billion). But it's just what Michael predicted when he made his call in early January.

In that report, and in others that followed, he said an 80% to 90% gain was possible.

I trust Michael's instincts. So I asked for his latest analysis of AMD.

"Bill, I've noticed that, since March 1, AMD generally has up days with more volume than down days – another good sign," Michael told me. "Also, the balance of power has steadily shifted to the bulls. There's no guarantee, obviously, but these are very encouraging signs."

Interestingly, Schaeffer's Research just reported that there's been a big uptick in "Call" option purchases, meaning there's a growing expectation that AMD shares are going to surge.

"I still believe in this company's rebound," Michael said. "The charts show potential for a breakout, which I think will be on the upside, despite the recent pressure."

We've seen some online chatter about a "takeout" – you know, a buyout – but we think the odds of that are, as the old saying goes, "slim and none – and slim just left." That doesn't mean that a super-sized rebound in the stock isn't in the cards. But a resurgence of any kind will now be ignited by AMD's turnaround plans.

AMD has announced a technology tie-in with "Tomb Raider," one of the most highly anticipated PC games of the New Year, and one the chipmaker says is part of its "AMD Gaming Evolved Program."

As we've also mentioned, a recent trade-journal analysis (industry trade journals are a great place to get investment ideas or updates on companies whose stocks you hold) said that the release of AMD's new "Jaguar" core-based Kabini and Temash "system on a chip" (SoC) lines finally has the tech community seeing the wisdom of the company's plan to integrate the CPU (central processing unit) with the GPU (graphical processing unit). The way this writer explained it, AMD is focusing on usable performance instead of mere raw power.

Kabini processors will be aimed at netbooks, ultra-thin notebooks and all-in-one (AIO) desktop PCs, while Temash will target the tablet and hybrids market. It's a "low-power" architecture which could find a lot of fans, given the continued evolution of the portable and mobile-computing wave.

This kind of speculative investment can provide a huge return should it play out as you hope.

As I said at the outset of today's report, we never follow Wall Street's lead. But once we've made a recommendation – and you've had the chance to establish your position – we love it when we see the big institutional players start to make the same recommendations: That's what can attract the big load of liquidity needed to drive your holdings higher.

AMD's highest closing price over the last three years was $9.91. If the stock could regain half of that peak, we're talking about a gain of 97% from Friday's close. That's almost a double – a stunning profit from such an established, longstanding tech firm, Michael said.

However, as we always emphasize with a turnaround play like this one, be sure to factor the high-risk/high-return nature of the stock into your thinking. Realize that the turnaround might not work out, and be sure to use such risk-risk-management strategies as "trailing stops" and position-sizing limits.

Know, up front, that you could be in for a volatile ride and that, should the company founder, a total loss is always a possibility. Never chase this type of stock. If you believe these realities will prove too stressful to invest comfortably, don't act on the recommendation.

The Amazing Micron: Michael has been busy – and on one heck of a hot streak. Memory-chipmaker Micron Technology Inc. (Nasdaq: MU) saw its shares surge 10.69% on Friday after the company reported second-quarter sales that blew away Wall Street expectations. Though Micron still reported a loss, it said that revenue came in at $2.08 billion – away above the $1.92 billion that had been expected. Michael recommended the stock back on Feb. 14 – and it's already up more than 26%.

The "Missiles "R' Us" Stock Rockets: Another of Michael's recommendations – GenCorp Inc. (NYSE: GY) – has already surged 19% since it was featured in the Feb. 22 report "If This Stock Doubles, You Can Thank North Korea." Nineteen percent is a massive return for a single month – it annualizes out to 228%. Said Michael: "GY continues to be a big performer."

[Editor's Note: Have you profited from any of these recommendations? We'd like to hear your story. Write to us at Unless otherwise specified, we recommend that investors maintain a 25% "trailing stop" on all holdings.]

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