Jim Cramer -- NXP Semi Is Smart to Diversify

NXP Semiconductor is taking steps to diversify its businesses, helping to create less volatility. Jim Cramer and Jack Mohr take a closer look.

Author:: Bret Kenwell
Publish date:: May 18, 2016 2:54 PM EDT

Shares of NXP Semiconductors (NXPI) - Get Report have been volatile this year. Shares are up 3% on Wednesday, and the stock is now up 3.5% in 2016. In the shorter term, the stock has risen almost 25% from its February lows.

Some investors are finding value in this stock now -- including Jim Cramer, co-manager of the Action Alerts PLUS portfolio, and Research Director Jack Mohr. NXP is one of the portfolio's holdings.

"NXP has emerged well beyond its legacy as a standard smartphone chipmaker," Mohr said. The company merged with Freescale last year, which allowed it to become the top producer of automotive semiconductor products in the world, Mohr said.

NXP is diversifying itself, which helps reduce its dependency on other companies. For example, chipbuyer Apple (AAPL) - Get Report can squeeze its chip suppliers on price and cause volatility in the companies' supply chains. That's a perfect example of why NXP has expanded beyond smartphone chips. NXP is also in the near-field communications business, further broadening its revenue stream.

NXP Semiconductor and Apple are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells NXPI or AAPL? Learn more now.

Near the end of April, the $29 billion market cap company topped expectations for earnings per share and revenue, and provided guidance that was viewed positively by Wall Street.