Today, we’re going to focus on three major semiconductor stocks that make waves each time earnings season comes around. One you should sell, one is a hold and the last is a great buy. I’ll put all three head to head to show you what’s working this earnings season and how to profit.
Earnings season has begun in earnest. It started with Alcoa (NYSE:AA), and it won’t end until the end of May. The moves you make now will impact your wealth, so let’s start separating the good from the bad in one of the most powerful sectors–Semiconductors.
Semiconductors enable just about every electronic device from your computer and smartphone to your radio and LED lights.
Companies in this industry are in a constant battle to make semiconductors smaller, lighter, faster and more efficient. That’s one reason why your first cellphone had to have its own carrying case and today you can slip it in your pocket.
The biggest player in this market is Intel (NASDAQ:INTC) with a market cap of over $140 billion. At about half that size is Advanced Micro Devices (NYSE:AMC), and bringing up the rear is Texas Instruments (NASDAQ:TXN). So, does bigger mean better when it comes to semiconductor companies?
In this case it does. When you put these companies head to head to head, you see that, in terms of fundamental strength, INTC is leaps and bounds ahead of the competition.
As you can see, each of these companies has strong return on equity, but you have to look at the whole picture to know which stocks to buy and which to sell. Overall, INTC has the better fundamentals and buying pressure, and the stock’s performance has given it the investor support it needs to be a solid source of profits for you in the upcoming weeks.
Click to EnlargeIn the last 12 months, INTC has gained 43% while AMD and TXN have lost 6% of their value.
INTC reported earnings yesterday, with earnings of 53 cents per share on revenues of $12.9 billion for the period. Analysts had expected the company to earn 51 cents on revenues of $12.83 billion.
In the same quarter of last year the company announced revenue of slightly higher at $12.87 billion and earnings of 56 cents per share.
AMD and TXN will report earnings after the market closes on Thursday(4/19) and Monday (4/23), respectively. Neither of these companies has received analyst upgrades, and while the stocks may receive some benefit from INTC’s report, I’m not expecting fireworks when it comes to these companies providing the kind of strong, wealth-building profits INTC can provide. Plus, INTC has the highest dividend payment of the three.
So, it’s clear who the winner of the semiconductor wars will be this quarter, and you should adjust your holdings accordingly.