Cypress Semiconductor (CY) and NVIDIA (NVDA) Are Top Picks From Doug Freedman, Research Analyst at RBC Capital Markets
67 WALL STREET, New York - October 3, 2012 - The Wall Street Transcript has just published its Semiconductors Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Semiconductor Capital Equipment - Cloud Computing - Mobile Device Consumer Demand - Enterprise Data Storage Demand - High Computing Power Technology - Semiconductor Inventory Burnoff
Companies include: Intel Corporation (INTC), Texas Instruments Inc. (TXN), Broadcom Corp. (BRCM), Analog Devices Inc. (ADI), Altera Corp. (ALTR), SanDisk Corp. (SNDK), NVIDIA Corporation (NVDA), Maxim Integrated Products Inc. (MXIM), Marvell Technology Group Ltd. (MRVL), Micron Technology Inc. (MU), Cypress Semiconductor Corporat (CY), Apple Inc. (AAPL), Research In Motion Ltd. (RIMM)
In the following excerpt from the Semiconductors Report, an expert analyst discusses the outlook for the sector for investors:
TWST: You have "outperform" ratings on the majority of your stocks. Which two or three would you recommend as best bets in the sector right now?
Mr. Freedman: There are a few stocks that I think have been pretty well beaten up recently. I guess I would put Cypress Semiconductor (CY) in the list of companies that I would be very comfortable recommending at this point. The logic that I am applying, or my investment thesis for Cypress, is the fact that I tend to want to look to buy into companies where their end markets might be at a seasonal weak point or at a cycle low. I think Cypress is experiencing that. The market is extremely bearish on the touch controller market that they were a significant player in. That does make up a portion of their revenues, but I think the market is missing that as the handset production - new products are brought to market, new Kindles are brought to market, ultimately ultrabooks with touch enablement come to market. There is a lot of opportunity for them to benefit from what I would call the continued mobile revolution.
They also have an SRAM product family that is pretty sizable piece of their revenue. The SRAM business will benefit from the com equipment end market as they continue to return to spending at what I would call more normalized rates. They've been burning through quite a lot of inventory in the com equipment market that was one area where customers got a little bit ahead of themselves and thought the end market was bigger than it turned out to be last year.
NVIDIA (NVDA) is another name that we're pretty positive on. There are two sides to that story. One is the fact that their graphics product, their core business, graphic processors, I believe has gotten underappreciated - just how good a product family their new generation of products is based on core called Kepler. I believe that they are going to take that significant market share there.
Again, they are a player in the wireless space with their applications processor family known as Tegra. Tegra is targeting the non-Apple (AAPL) tablet market. That market has been still challenged to sort of gain consumer adoption, so investors are very cautious there.
I personally am not a huge fan of the long-term applications processor business, but the company is doing a fairly good job of building a full suite to their wireless solutions, where they now have a wireless modem solution and an applications processor, which I think is necessary to make inroads, or significant inroads, in the market that they are targeting. So they've got two levers that I believe can surprise people, first being the GPU business, and second being their success in the mobile market.
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