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NXP Semiconductors (NXPI) has a very bullish Chaikin Power Gauge rating and recently triggered an Oversold Buy signal in Chaikin Analytics. NXPI made a new all-time high on Friday at 73.82 based on its expanded chip presence in Apple's iPhone 6 (AAPL), but reversed to close at 71.98 down 1.03 on the day. Although the stock is up 200% from its April 2013 low of 24.66, the company’s improving fundamentals and reasonable projected Price to Earnings ratio of 14x 2015 estimates of $5.00 per share make this an attractive investment in the fast growing fields of mobile payments and device interconnectivity.
NXP Semiconductors, which is based in the Netherlands, designs and manufactures mixed signal semiconductor chips for mobile devices, automotive applications and identification solutions for wireless and mobile payments. The company’s optimized blend of analog and digital functionality provides better power efficiency and improved performance for their clients.
The recent excitement in NXPI stock has centered on the iPhone 6 launch where NXPI has 2 chip sets. One powers the sensor hub while the other is critical to the security of the Apple Pay mobile payments solution. NXP Semiconductors’ near-field communications chips aid the safety and simplicity of Apple Pay.
NXPI is benefiting from more than just the iPhone 6 launch as it has won contracts from Delphi in the automotive area and is a major player in enabling connectivity in the Internet of Things where devices in the healthcare, appliance and lighting business use wireless technology to communicate with one another.
NXPI is expected to earn $4.20 per share in 2014 up from $2.98 in 2013 on an 8% increase in revenues. The company has beaten analyst estimates in 6 of the last 7 quarters and on July 23, 2014 guided sharply higher for the 3rd quarter after beating analyst estimates by $0.05. The company reports earnings on 10/23/2014 and is holding an analyst meeting in NYC on November 5th. NXPI will generate more than $5 billion in revenue in 2014 but does not have the name recognition of Intel (INTC), Texas Instruments (TXN), Skyworks (SWKS) or RF Micro Devices (RFMD). The iPhone 6 roll-out and their November analyst meeting should increase their profile with institutional investors.
The company has bought back 2% of its stock from KKR, one of its private equity backers and more buybacks are possible. Some Wall Street analysts are projecting 5 year earnings per share growth of 16 – 20 % per year. This makes the company attractive from a valuation standpoint at 14x 2015 earnings estimates of $5.00 per share. The company is highly leveraged and has recently had labor problems to deal with but the launch of Apple Pay is viewed by some as a game changer for NXPI.
If the stock pulled back to the 68 – 69 level that would be an ideal short-term entry point.
NXPI has a very bullish Chaikin Power Gauge rating that is driven by very strong Earnings, very bullish Price/Volume activity and very bullish Expert Opinions. Analysts have been raising their earnings estimates and ratings on NXP Semiconductors and the stock is selling at a very reasonable projected P/E ratio.
Plus:
NASDAQ Chaikin Power Indexes based on the Chaikin Power Gauge Rating
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
