3 Chip Stocks to Buy as the Industry Rebounds

As a result, the company was able to land design wins in Microsoft's (MSFT) Surface tablet and Amazon's (AMZN) Kindle Fire. Investors should expect Atmel to differentiate itself from the rest of the pack by growing in areas where the competition can't. Atmel's Xsense touch sensor is the tool to do that.

Likewise, the company's roll-to-roll metal mesh technology is able to offer features that are not yet common in today's industry-leading products, including those made by Apple. In 2013, I have Atmel listed as one of my top turnaround candidates. And at $6.55 per share, there is a good chance that the stock can gain another 50%, reaching $10 per share by the second half of 2013.

Nvidia (NVDA)

I continue to feel good about Nvidia's prospects despite a waning PC business. Wall Street doesn't feel the same way, a reason why the company declined 11% last year. However, despite the doom against Nvidia, the company has delivered a solid performance. Unfortunately, investors have not cared.

For instance, in the company's most recent quarter, Nvidia reported net income of $209.1 million, or 33 cents per share, on revenue of $1.2 billion. The company exceeded consensus estimates of 30 cents per share and revenue of $1.1 billion.

The better-than-expected results were largely attributable to growth in consumer sales, helped by an increase in demand for Tegra. This means Nvidia is continuing to steal market share from the likes of Advanced Micro Devices (AMD) and Intel, which was hurt by rising inventories. To top it off, Nvidia is projecting 20% growth.

It also helps that the company recently announced its first-ever dividend payout of 7.5 cents per share, which began Dec. 14. This is in addition to extending its share-repurchase program by an additional two years through 2014. At current levels, the risk-reward tradeoff favors Nvidia. With solid execution, the stock could trade in the range of $15 to $20 over the next 12 to 16 months.

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At the time of publication, the author was long AAPL and held no positions in any other stock mentioned.

Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.

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