NEW YORK (TheStreet) -- Chip manufacturer Advanced Micro Devices (AMD - Get Report) is cutting its revenue forecast, as a result of the greater than expected decline in the demand for desktop computers that rely on its chips. Semiconductor companies that are exposed to the PC-market are likely to continue to suffer revenue declines. Semiconductor companies like Intel Corporation (INTC - Get Report), that are making a move away from chips powering PC's to chips powering mobile devices and data centers, are likely to do well.

The U.S. semiconductor industry is a top export producer "and every year, chip makers and designers dramatically increase the performance of their products while decreasing prices, making high-end technology goods increasingly productive and affordable for consumers," according to the semiconductor trade association.

So, what are the best mid-cap semiconductor companies investors should be buying? Here are the top three, according to TheStreet Ratings,TheStreet's proprietary ratings tool.

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Check out which semiconductor stocks made the list. And when you're done, be sure to read about which materials stocks to sell now. Year-to-date returns are based on July 8, 2015, closing prices. The highest-rated stock appears last.

SIMO ChartSIMO data by YCharts
3. Silicon Motion Technology Corporation (SIMO - Get Report)

Rating: Buy, A
Market Cap: $1 billion
Year-to-date return: 23.9%

Silicon Motion Technology Corporation, a fabless semiconductor company, designs, develops, and markets semiconductor solutions worldwide.

"We rate SILICON MOTION TECH -ADR (SIMO) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • SIMO's very impressive revenue growth greatly exceeded the industry average of 5.2%. Since the same quarter one year prior, revenues leaped by 52.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SIMO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.77, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 300.00% and other important driving factors, this stock has surged by 68.45% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SIMO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • SILICON MOTION TECH -ADR 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 year. We feel that this trend should continue. During the past fiscal year, SILICON MOTION TECH -ADR increased its bottom line by earning $1.30 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($2.11 versus $1.30).
  • 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 303.9% when compared to the same quarter one year prior, rising from $3.83 million to $15.46 million.

IDTI ChartIDTI data by YCharts
2. Integrated Device Technology, Inc. (IDTI)

Rating: Buy, A
Market Cap: $3 billion
Year-to-date return: 4.3%

Integrated Device Technology, Inc. designs, develops, manufactures, and markets a range of semiconductor solutions for the communications, computing, and consumer industries worldwide. It operates in two segments, Communications, and Computing and Consumer.

"We rate INTEGRATED DEVICE TECH INC (IDTI) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 33.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • IDTI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.82, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 766.66% and other important driving factors, this stock has surged by 37.68% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, IDTI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • INTEGRATED DEVICE TECH INC 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. During the past fiscal year, INTEGRATED DEVICE TECH INC increased its bottom line by earning $0.74 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus $0.74).
  • 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 135300.0% when compared to the same quarter one year prior, rising from $0.03 million to $39.27 million.

MSCC ChartMSCC data by YCharts
1. Microsemi Corporation (MSCC)

Rating: Buy, A
Market Cap: $3.1 billion
Year-to-date return: 15.2%

Microsemi Corporation designs, manufactures, and markets analog and mixed-signal semiconductor solutions in the United States, Europe, and Asia.

"We rate MICROSEMI CORP (MSCC) 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 compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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

  • 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 468.1% when compared to the same quarter one year prior, rising from -$6.76 million to $24.88 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 3.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 2.74, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has significantly increased by 130.06% to $69.50 million when compared to the same quarter last year. In addition, MICROSEMI CORP has also vastly surpassed the industry average cash flow growth rate of 28.45%.
  • The gross profit margin for MICROSEMI CORP is rather high; currently it is at 60.09%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MSCC's net profit margin of 8.40% significantly trails the industry average.
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