This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Are Micron and NXP Standout Semiconductor Stocks?

Chris Lau, Kapitall: Semiconductor stocks Micron Technology and NXP Semi  continue to be on an upward trajectory.

Micron Technology (MU) and NXP Semiconductor (NXPI) are semiconductor stocks that continue to be on an upward trajectory. Both are at 52-week highs, so neither company would appeal to value investors. Many positive drivers still support a bullish view, namely strong demand and favorable product developments.

Read more from Kapitall: Did the January Slide Create a Buying Opportunity?

NXP makes digital signal processing products. It reported strong quarterly earnings on February 5. Revenue was $1.293B, gross margin was steady at 45.6%, while operating margins were 15.3% for the quarter. For the year, operating margin was 13.5%. NXP earned $1.36 per share, which gives a P/E of 38. Its price of profitability (or forward P/E) is just 14, which reflects the expectation that the company will grow earnings this year.
NXP’s HPMS (High Performance Mixed Signal) product performed well, and contributed to the 22% year-over-year growth for NXP. The automobile sector grew, and should be expected to be a strong driver for demand. NXP established a sales run-rate of over $1B annually.

In the DRAM and NAND space, Micron continues to be a favorite. It was upgraded by investment firm JMP to “outperform.” In its fiscal Q1, free cash flow was $838M. This is an improvement from the $385M in Q4. Micron’s gross margin helped contribute to the improvement in cash flow. In Q1, it was 32%, compared to 12% last year.

Micron benefited from strong and stable DRAM pricing. On the supply side, Micron boosted output by acquiring Elpida. The acquisition closed on July 31, 2013, and is now contributing to Micron’s balance sheet.

Micron and NXP by the charts

Micron’s closest comparables are SanDisk (SNDK) and Spansion (CODE). Micron has the most favorable valuation based on forward P/E.

No pullback in sight

Investors would like a pullback in these semiconductor plays, but that does not seem likely. Unless product pricing deteriorates or either company reports a disappointing quarter, both stocks appear poised to continue their upward march.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.37 -0.85%
FB $117.95 0.44%
GOOG $697.23 0.70%
TSLA $224.18 -3.50%
YHOO $36.03 0.06%


Chart of I:DJI
DOW 17,666.88 -84.03 -0.47%
S&P 500 2,051.44 -11.93 -0.58%
NASDAQ 4,729.3330 -33.8910 -0.71%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs