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. Micron Technologies ( MU): Engages in the manufacture and marketing of semiconductor devices worldwide. Market cap at $26.39B, most recent closing price at $24.51.2. NXP Semiconductor ( NXPI): Provides mixed signal solutions and semiconductor components primarily in Japan, Europe, South Korea, Rest of Asia Pacific, and the Americas. Market cap at $13.02B, most recent closing price at $52.05. ( List compiled by Chris Lau, a Kapitall Contributor. Information sources from Zacks Investment Research.)