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Five Semiconductor Companies Leading the S&P 500

NEW YORK (TheStreet) -- These five semiconductor companies are leading the S&P 500 in an industry-wide rally on Tuesday.

Integrated Device Technology (IDTI - Get Report) led the gains, jumping 12.3% to $10.67 as of 12:20 p.m. EDT. On Monday evening, the San Jose, Calif.-based company reported second-quarter earnings of 10 cents a share on revenue of $124.6 million, compared to 9 cents on $133.4 million a year earlier. Analysts surveyed by Thomson Reuters had expected 8 cents a share on revenue of $125.1 million.

Management also announced it had increased its share repurchase authorization to $150 million and will resume repurchase activity in the current quarter.

TheStreet Ratings team rates Integrated Device Tech as a Buy with a ratings score of B-. The team has this to say about its recommendation:

"We rate Integrated Device Tech INC (IDTI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

 

Micron Technology  (MU - Get Report), a NAND Flash and DRAM memory specialist, has climbed 3.7% to $17.34 as of 12:20 p.m. EDT, adding to the stock's 174% gain in the year to date.

TheStreet Ratings team upgraded its rating on the Boise, Idaho-based company to "buy" from "hold" on Monday.

The team has this to say about its recommendation:

"We rate Micron Technology Inc (MU) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 44.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 729.16% and other important driving factors, this stock has surged by 225.53% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MU should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Micron Technology Inc reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Micron Technology Inc turned its bottom line around by earning $1 a share vs. -$1.04 a share in the prior year. This year, the market expects an improvement in earnings ($2.13 vs. $1).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 802.9% when compared to the same quarter one year prior, rising from -$243 million to $1,708 million.

 

Cabot Microelectronics (CCMP - Get Report), a niche supplier of polishing slurries for the semiconductor industry, is up 9.4% to $42.79 after reporting better-than-expected financials before the bell. The company reported fourth-quarter earnings of 70 cents, beating Wall Street's expectations by 10 cents according to Thomson Reuters. Revenue was $116.3 million, a 5.1% increase on the same period a year earlier, beating estimates by $4.1 million.

TheStreet Ratings team rates Cabot Microelectronics Corp as a Buy with a ratings score of B-. The team has this to say about its recommendation:

"We rate Cabot Microelectronics Corp (CCMP) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity, attractive valuation levels, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

 

Shares of TriQuint Semiconductor  (TQNT) have jumped 5.8% to $7.77. Activist investor group Starboard Value, TriQuint's largest shareholder, has asked the chipmaker to consider divesting its mobile power amplifier business. In a letter to CEO Ralph G. Quinsey, it said the unit has contributed to "significant utilization issues and missed design cycles" which has "reduced consolidated gross margins".

The company recorded better-than-expected third-quarter earnings last week of 16 cents a share on revenue of $250.8 million. Analysts surveyed by Thomson Reuters had expectations of 10 cents a share on revenue of $250.1 million.

The Oregon-based company forecast disappointing fourth-quarter figures, expecting between 12 cents to 14 cents a share on $260 million to $270 million in revenue. Analysts had expected 19 cents a share on $280.5 million in revenue.

TheStreet Ratings team rates TriQuint Semiconductor Inc as a Hold with a ratings score of C. The team has this to say about its recommendation:

"We rate TriQuint Semiconductor Inc (TQNT) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

 

Himax Technologies (HIMX - Get Report), a supplier of micro-display technology used in Google (GOOG) Glass, has climbed 6.8% to $10.29. Shares were boosted after Google confirmed it is increasing production of the prototype to facilitate an expansion of its 'Explorer' program. Though a full commercial launch isn't expected until mid- to late-2014, developers and reviewers who received original test models will be able to refer three friends to purchase the gadget.

Himax is also rumored to be contributing to Microsoft (MSFT) eyewear technology, though a Microsoft spokesperson declined to comment on the speculation.

TheStreet's fundamental analysis expert Bryan Ashenberg had this to say about Himax:

"Himax is an exciting play on what is sure to become the market's next technological infatuation, wearable computers. We have heard rumors for months now that the next generation Xbox may come equipped with two wearable displays per console. Himax believes it controls greater than 75% of the LCoS market share, making it the likely supplier to Microsoft. That is why we have the stock as a pick within our Trifecta Stocks portfolio which only contains stocks we consider to be the best of the best. At Trifecta Stocks we strive to find only the top 1% of all the stocks available on the U.S. stock exchanges and have deemed Himax one of those. You can read more about this stock pick and our other picks by taking a 14-day free trial to the service here: Try Trifecta Stocks."

TheStreet Ratings team rates Himax Technologies Inc as a Buy with a ratings score of B. The team has this to say about its recommendation:

"We rate Himax Technologies Inc (HIMX) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9%. Since the same quarter one year prior, revenues slightly increased by 9.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HIMX's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.41, which illustrates the ability to avoid short-term cash problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, Himax Technologies Inc's return on equity exceeds that of both the industry average and the S&P 500.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 398.71% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HIMX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Himax Technologies Inc has improved earnings per share by 22.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Himax Technologies Inc increased its bottom line by earning 30 cents a share vs. 6 cents a share in the prior year. This year, the market expects an improvement in earnings (37 cents vs. 30 cents).

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SYM TRADE IT LAST %CHG
TQNT $86.40 4.78%
CCMP $46.41 0.00%
HIMX $6.59 0.00%
IDTI $23.16 0.00%
MU $28.19 0.21%

Markets

DOW 18,162.99 +121.45 0.67%
S&P 500 2,123.48 +19.28 0.92%
NASDAQ 5,106.5930 +73.8420 1.47%

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