Texas Instruments Incorporated (NASDAQ:TXN) started in the 1930s as an engineering company for the oil and gas industry. When WWII broke out, TI got into the defense game.
Then, in 1958, a TI engineer invented the integrated circuit and the company moved into the new field of semiconductors. This company invented and built the Computer Age.
Now it is the world’s leading manufacturer of analog (basically, converting analog inputs to digital outputs, like converting your voice into a digital message on someone’s phone) and embedded chips (chips used in defense, wireless communications, transportation, energy, telecommunications, and medical technology). Those two TXN divisions represented more than 85% of TI’s revenue last year.
Analog signal processing (ASP) and digital signal processing (DSP) are the key components in an industry that research firm TechNavio expects to be a $245 billion market by 2022. with compounded annual growth of 14% to 2019 at a minimum.
That industry? Embedded computing (EC).
Basically EC is defined a system that isn’t a computer but that has a computer embedded in it. Like a car or a fighter jet or a toaster oven or a phone. Basically EC will power the Internet of Things (IoT) revolution and also sub-categories like driverless cars and smartphones.
And TXN is the top dog in EC.
Not Just Calculators
It’s an interesting thought that this massive, familiar company many know simply for its calculators is at the forefront of the next chapter of the Digital Age. After 85 years, it’s still going strong.
Texas Instruments’ most recent numbers prove that out. Revenues grew 13% in Q1 compared to the same quarter last year. Its Analog division was up 20% and its operating margins grew as well. Profits for Analog were up 36% and its Embedded division saw profits rise 28%.
TXN stock is up 38% in the past 12 months and continues to kicks out a respectable 2.5% dividend to boot. It boosted its dividend for the past 13 years and it has sunk $25 billion into share repurchases over the last decade; it’s a very shareholder-friendly company that rewards long-term investors.
Sales in its EC division will continue to grow as self-driving cars, smart cars and appliances grow. Also, EC is a growing priority with the military. Given TXN’s long relationship with the U.S. defense establishment, it should have a good slice of that pie as well.
TXN stock is a consumer play, a defense play and a tech play all wrapped into one.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
