NEW YORK (TheStreet) – Of all of the groups that have been discussed in this series of articles so far, the 38% year-to-date gain posted by the semiconductor industry according to Fidelity is perhaps the biggest surprise this year.
Investors entered 2014 with modest growth expectations, partly because chip suppliers such as Qualcomm (QCOM) , which makes wireless chips for Apple (AAPL) and Samsung (SSNLF) , were expected to be hampered by weak margins stemming from lower prices of smartphones.
While the predictions about prices were mostly true, the Philadelphia Semiconductor Index (SOX) is on track to end the year with almost a 30% gain. Take a look at the chart below, courtesy of YCharts.QCOM data by YCharts
Within the industry, Qualcomm has dropped about 1% in 2014 after it posted a gain of more than 20% in 2013.
ARM Holdings (ARMH) , which licenses and sells its technology and products to device makers, has lost about 16% so far this year, although it has rewarded its shareholders with a nearly six-fold gain during the last five years.
With Qualcomm and ARM wallowing in the red for most of 2014, the traditional laggards led the industry's biggest gains.
Leading the charge was Intel (INTC) , which has gained about 40% so far in 2014. Aside from benefiting from the rebound from the personal-computer industry, Intel has pushed into a business known as the Internet of Things , a move that has made investors excited about the company's future. In 2014, Intel has placed huge bets in wearable technology, including its acquisition of Basis Science, a company that makes wearable devices for health applications.
According to research firm Gartner, by 2020, the Internet-of-Things market will increase to 26 billion units installed, a 30-fold jump from fewer than one billion units five years ago. That should bode well for Intel's stock in 2015.
For the same reason, investors may want to stock up on Broadcom (BRCM) for 2015.BRCM data by YCharts
With a gain of about 45% so far in 2014, Broadcom, which plans to exit the wireless baseband business and move completely into Internet of Things, is a stock to watch. The company has designed chips for Apple partners to build devices such as garage door-openers, giving it expertise in the Internet-of-Things market.
Another chip stock to keep an eye on is Atmel (ATML) , which has gained about 6% in 2014. Atmel may not carry the muscle of Qualcomm in wireless devices, but the company is becoming an industry leader in touch controllers and sensors.
This year also brought some despair. With a year-to-date decline of about 34%, Advanced Micro Devices (AMD) was a disappointment. And after Bank of America cut AMD's price target on Friday, AMD investors have to wonder what's left to hang onto in 2015.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
TheStreet Ratings team rates INTEL CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate INTEL CORP (INTC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
You can view the full analysis from the report here: INTC Ratings Report