NEW YORK (TheStreet) -- Shares of Atmel (ATML) gained 3.6% to close at $9.75 Monday following a report that the chipmaker is exploring strategic alternatives including a potential sale.

Atmel is working with investment bank Qatalyst Partners for a potential sale, according to Reuters. There is reportedly no guarantee the company will decide to sell itself, however, according to the news service.

Atmel designs and manufactures microcontrollers for use in RF devices, flash memory, touch sensors and controllers, and application-specific products. The company has a market capitalization of about $4 billion.

More than 9.4 million shares of Atmel were traded during regular trading hours Monday, well above the company's average trading volume of about 5.2 million shares a day.

Insight from TheStreet's Research Team:

Atmel is a core holding of David Peltier's Stocks Under $10 Portfolio. During the most recent weekly roundup, this is what Dave had to say about the stock:

Atmel (ATML; 1,000 shares; 5.09%, Inflection Point; $10 price target): The company makes microcontrollers used in electronics. The shares added 6% to recent gains this week on speculation of continued consolidation in the semiconductor sector. We believe that management can continue to expand margins in the coming quarters. In the meantime, we'll qualify for the next quarterly dividend of $0.06 per share (1.7% yield) at the close of trading on June 10.

-David Peltier, "Stocks Under $10 Weekly Roundup," originally published 6/8/2015 on$10

TheStreet Ratings team rates ATMEL CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ATMEL CORP (ATML) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ATMEL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ATMEL CORP turned its bottom line around by earning $0.08 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($0.46 versus $0.08).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 661.5% when compared to the same quarter one year prior, rising from $2.17 million to $16.50 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ATMEL CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has decreased to $40.14 million or 13.19% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: ATML Ratings Report