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Slim Demand for PCs Weakens Chips

Stocks in this article: SOXXINTCDELLHPQCRUSMRVLRBCNTSM

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number are projected to move higher by that percentage over the next 12 months.

Analysis of the Philadelphia Semiconductor Index

Looking at the overvalued/undervalued data, 18 members of the SOX are undervalued and 12 are overvalued. The most overvalued stock is Cirrus Logic (CRUS) by 61.2%. The most undervalued stocks are Advanced Micro (AMD) by 41.9%, Marvell Technologies (MRVL) by 39.5% and Rubicon Technologies (RBCN) by 35.1%.

Only three stocks in the SOX are "4-Engine" Buy rated: Intel (INTC), Marvell and Taiwan Semiconductor (TSM).

Twenty SOX members are higher over the past 12 months, while nine are lower. Mellanox Tech (MLNX) is up 303.1% with Cirrus Logic up 195.2%. The biggest losers are Memc Electronic Materials (WFR) is down 57.7% and Interdigital (ICDD) is down 50.2%.

SOX stocks are not cheap on a P/E basis as 18 have ratios above 15.0.

Profiles

Here are profiles for the three semiconductor stocks in the SOX that are Buy rated according to ValuEngine. www.ValuEngine.com:

  • Intel Corp (INTC) ($24.91) is trading just above its July 12 low at $24.68. My semiannual value level is $21.14 with a weekly pivot at $24.95 and monthly risky level at $27.97. This stock was added to my ValuTrader Model Portfolio at $24.75 on July 12.

  • Marvel Technology (MRVL) ($10.45) is trading just above its July 12 low at $10.27. My semi annual value level is $10.02 with a weekly pivot at $10.65 and monthly risky level at $12.87. This stock was added to my ValuTrader Model Portfolio at $11.30 on June 25 and was removed at was removed at $11.85 on Aug. 9 for a gain of 4.9%. Marvel returned to the model portfolio at $10.45 on Aug. 27.

  • Taiwan Semiconductor (TSM) ($14.37): My semiannual and annual value levels are $12.58 and $11.32 with a semiannual pivot at $13.91, and monthly and quarterly risky levels at $15.52 and $15.80.



    At the time of publication the author held no positions in any of the stocks mentioned.

    This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

    Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.
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