With warnings having started from key leaders in the realm of chip stocks, the question is whether or not you can trust the analysts and the consensus upside.  24/7 Wall St. has gone in and evaluated the leaders in each aspect of the semiconductor sector to see where there is value and where the risks currently lie.  We evaluated the following chip companies: Intel Corporation (NASDAQ: INTC); QUALCOMM Incorporated (NASDAQ: QCOM); Texas Instruments Inc. (NASDAQ: TXN); Broadcom Corp. (NASDAQ: BRCM); NVIDIA Corporation (NASDAQ: NVDA); Advanced Micro Devices, Inc. (NYSE: AMD); Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM); Freescale Semiconductor Holdings (NYSE: FSL); SanDisk Corporation (NASDAQ: SNDK); Applied Materials Inc. (NASDAQ: AMAT); Lam Research Corporation (NASDAQ: LRCX); and Altera Corporation (NASDAQ: ALTR).

In a further effort to show just how much these have sold off, we have shown the moves in the following key semiconductor ETFs: Market Vectors Semiconductor ETF (AMEX: SMH); SPDR S&P Semiconductor (AMEX: XSD); and the ProShares Ultra Semiconductors (AMEX: USD).  We have also run the same screens in retail, gold and silver miners, conglomerates, industrial giants, and major oil companies with links to those at the end of this article. Here is the screening of value and upside in the chip giants:

Intel Corporation (NASDAQ: INTC) traded at $26.60 with a market value of $129 billion.  The consensus target price for the king of PC processors from Thomson Reuters is $29.75 and the 52-week trading range is $19.16 to $29.27.  This DJIA component’s most recent yield was listed as 3.2%. Intel’s implied upside to the consensus target is 16% and it is worth noting that the consensus target is just above the 52-week high.

QUALCOMM Incorporated (NASDAQ: QCOM) traded at $57.78 with a market value of $99 billion.  The consensus target price from Thomson Reuters is $71.92 and the 52-week trading range is $45.98 to $68.87.  The CDMA giant yields about 1.7% after dividend hikes. The implied upside to the consensus target is just under 25% but we would note that the consensus target is still over $3.00 above the 52-week high.

Texas Instruments Inc. (NASDAQ: TXN) traded at $29.15 with a market value of $33.4 billion.  The consensus target price from Thomson Reuters is $35.80 and the 52-week trading range is $24.34 to $35.30.  The yield here is about 2.3%. TI’s implied upside to the consensus target is just under 23% and that target is still just above its 52-week high.

Broadcom Corp. (NASDAQ: BRCM) traded at $31.85 with a market value of $17.5 billion.  The consensus target price from Thomson Reuters is $43.21 and the 52-week trading range is $27.59 to $39.66.  Broadcom has a paltry yield of only about 1.2%, but its implied upside to the consensus target is about 35%.  Be advised that this consensus target is almost $4.00 above the 52-week high.

NVIDIA Corporation (NASDAQ: NVDA) trades at $12.25 and its market cap is just over $7.5 billion. This graphics processor leader has a consensus target price of $16.64 and the 52-week trading range is $11.47 to $20.05.  NVIDIA pays no dividend and that is something which it should consider changing since it has about $3 billion in cash and liquidity. Its implied upside to the consensus target is about 35% and that consensus target price is well under its 52-week high.

Advanced Micro Devices, Inc. (NYSE: AMD) trades at $6.06 and its market cap is only $4.25 billion despite it being so actively traded. The consensus target price for this distant number-2 in PC processors is $8.55 and the 52-week trading range is $4.31 to $8.71.  AMD has no dividend due to very spotty earnings. Its implied upside to the consensus target is more than 41% if you trust the analysts here and its target price is just under its 52-week high.

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) currently trades at $14.15 for its ADR and Yahoo! Finance shows its market value being about $73 billion.  The consensus target price from Thomson Reuters is $16.70 and the 52-week trading range is $10.75 to $16.15.  The yield is listed as roughly 2.9%. TSM’s implied upside to the consensus target is 18% and the consensus target is about 4% above the 52-week high.

Freescale Semiconductor Holdings (NYSE: FSL) has been battered since its IPO and shares now trade at $9.75 with an implied market value of $2.4 billion.  This private equity backed chip outfit’s consensus target price from Thomson Reuters is all the way up at $17.92 and the 52-week (less than one-year actually) trading range is $9.43 to $20.97.  Freescale has NO DIVIDEND, which makes it stand out against the peer group now.  Still, if you trust the analysts here the implied upside to the consensus target is a whopping 83%!  Trust is hard to come by here, particularly for a company where backers will sell shares along the way into strength.

SanDisk Corporation (NASDAQ: SNDK) trades around $32.50 and its market value is about $7.9 billion.  The king of flash memory’s consensus target price from Thomson Reuters is $44.46 and the 52-week trading range is $31.34 to $53.46.  SanDisk has no current dividend, something which may need to change down the road considering that this is not anywhere close to a new company.  Its implied upside to the consensus target is 37% but the company has had two warnings.

Applied Materials Inc. (NASDAQ: AMAT) currently trades at $10.55 and its market value is $13.6 billion.  The consensus target price from Thomson Reuters is $13.65 and the 52-week trading range is $9.70 to $13.94.  Applied now yields about 3.4% and its implied upside to the consensus target is about 29%.

Lam Research Corporation (NASDAQ: LRCX) is worth more than $4.5 billion today but it is acquiring Novellus Systems, Inc. (NASDAQ: NVLS) for about $3 billion in stock, so it will soon be larger.  Its shares trade at $38.00, its consensus target price is $48.53 and the 52-week trading range is $34.81 to $48.88.  Lam Research pays NO DIVIDEND now and its implied upside is almost 28%.

Altera Corporation (NASDAQ: ALTR) currently trades at $33.90 and its market value is $10.9 billion.  The consensus target price from Thomson Reuters is $41.00 and the 52-week trading range is $30.39 to $48.91.  Altera has a dink yield of only about 1% and we expect a dividend hike in the coming weeks or months. Its implied upside to the consensus target is about 21% and this one is well off highs and the target is almost $8.00 under its 52-week high.

Market Vectors Semiconductor ETF (AMEX: SMH) has undergone a total transformation since it is no longer the Semiconductor HOLDRs.  At $31.25 its range since the change is listed as $28.86 to $36.17.  This ETF is said to have assets of almost $400 million, but that changes based upon inflows and outflows on top of the change in the price.

SPDR S&P Semiconductor (AMEX: XSD) ETS is now one of the longest ETF in chips since the HOLDRS changed.  At $43.50 now, its 52-week range is $40.09 to $59.85 and it still has only about $44 million in assets.  This one peaked in January and the mix of components has made it more volatile than many leaders.  This ETF would now have to rally by more than 37% to hit its 52-week high again.

ProShares Ultra Semiconductors (AMEX: USD) uses leverage of 2-times for its semiconductor trading, so this is one where it will feel just like getting your fingernails ripped out when your timing is wrong. At $33.50, this leveraged ETF has a 52-week range of $26.18 to $46.46. It would have to rally about 39% to hit its 52-week high again.

As you can see, the semiconductor and chip leaders have now pulled back substantially from their highs seen throughout 2012.  The issue to consider is that Dell Inc. (NASDAQ: DELL) and Hewlett-Packard Co. (NYSE: HPQ) have confirmed that PC sales are slowing.  Some of this is due to Apple Inc. (NASDAQ: AAPL) and some of it is due to weakness in Europe, weak PC spending in the Americas, and a slowing of growth in the BRIC nations.  How the Microsoft Corporation (NASDAQ: MSFT) launch of Windows 8 will impact the PC refresh cycle ahead is now another wild card since PC sales guidance is looking softer than anticipated from just a couple of weeks ago.

We also want to warn investors to not just blindly trust the analysts in semiconductor price targets here.  Summer can be a brutal time for chip stocks.  The drop in the ProShares Ultra Semiconductors (AMEX: USD) during the summer of 2011 was about 40% and the drop from the 52-week high in 2011 to that end of summer trough was almost 50%.

The drop in the SPDR S&P Semiconductor ETF (AMEX: XSD) during the summer of 2011 was about 25%, but the drop from the peak in early 2011 here to the trough of late-summer was about 31%.

Summer is a very tough time to invest in chip stocks, and the question now is just how much the slowdown is going to continue taking out of chip stocks.  We would certainly avoid trying to play the game of trying to catch falling knives here, but these are all worth keeping an eye on for those inflection points where the valuations start to adequately discount the warning signs.

Gold & Silver Miners with the Most Upside Value  

Major Oil Companies with the Most Upside Value

Industrials with the Most Upside Value  

Conglomerates with the Most Upside Value

Retail Stocks with Upside 

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JON C. OGG

Aetna Inc. (NYSE: AET) Cut to Hold at Argus.

Akamai Technologies, Inc. (NASDAQ: AKAM) Raised to Neutral at Citigroup.

Baker Hughes Inc. (NYSE: BHI) Cut to Neutral at JPMorgan.

China Life Insurance (NYSE: LFC) named Bear of the Day at Zacks.

Cisco Systems, Inc. (NASDAQ: CSCO) Raised to Overweight at Barclays.

Dunkin’ Brands Group Inc. (NASDAQ: DNKN) Raised to Buy with $38 target at Argus.

Genworth Financial Inc. (NYSE: GNW) maintained Neutral but cut target to $6 from $8 at Credit Suisse.

Hatteras Financial Corporation (NYSE: HTS) Started as Neutral at Credit Suisse.

Lam Research Corporation (NASDAQ: LRCX) Cut to Underweight at JPMorgan.

Novellus Systems, Inc. (NASDAQ: NVLS) Cut to Underweight at JPMorgan.

Patriot Coal Corporation (NYSE: PCX) Cut to Market Perform at FBR.

ReneSola Ltd. (NYSE: SOL) maintained Neutral and cut target to $2.00 at Credit Suisse.

SandRidge Energy, Inc. (NYSE: SD) Raised to Hold at Canaccord Genuity.

Solazyme, Inc. (NASDAQ: SZYM) Started as Outperform at Credit Suisse.

Texas Capital Bancshares (NASDAQ: TCBI) named Bull of the Day at Zacks.

Textainer Group Holdings Limited (NYSE: TGH) named Value stock of the day at Zacks.

Weatherford International Ltd. (NYSE: WFT) Raised to Overweight at JPMorgan.

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ABB Limited (NYSE: ABB) Cut to Equal Weight at Morgan Stanley.
Asbury Automotive Group, Inc. (NYSE: ABG) named as Value stock of the day at Zacks.
Banco Bilbao Vizcaya Argentaria (NYSE: BBVA) Raised to Outperform at Credit Suisse.
B&G Foods Inc. (NYSE: BGS) reinstated as Neutral at Credit Suisse.
CSX Corp. (NYSE: CSX) Cut to Neutral at JPMorgan.
Gilead Sciences Inc. (NASDAQ: GILD) Cut to Equal Weight at Barclays.
ImmunoCellular (NASDAQ: IMUC) named Bull of the Day at Zacks.
Infosys Limited (NASDAQ: INFY) Cut to Neutral at Credit Suisse.
Itron, Inc. (NASDAQ: ITRI) Cut to Neutral at Credit Suisse.
KLA-Tencor Corporation (NASDAQ: KLAC) Cut to Neutral at JPMorgan.
Lam Research Corporation (NASDAQ: LRCX) Cut to Neutral at JPMorgan.
NextEra Energy Inc. (NYSE: NEE) Reiterated Buy at Argus.
Norfolk Southern Corp. (NYSE: NSC) Cut to Neutral at JPMorgan.
Oracle Corporation (NASDAQ: ORCL) Cut to Market Perform at JMP Securities.
Willis Group Holdings (NYSE: WSH) named Bear of the Day at Zacks.

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Automatic Data Processing, Inc. (NYSE: ADP) Cut to Neutral at Citigroup; Cut to Market Perform at Wells Fargo.
Chesapeake Energy Corporation (NYSE: CHK) Cut to Underweight at JPMorgan.
The Charles Schwab Corporation (NYSE: SCHW) Cut to Neutral at JPMorgan.
Corning Inc. (NYSE: GLW) Cut to Underweight at Morgan Stanley.
E*TRADE Financial Corporation (NASDAQ: ETFC) Cut to Neutral at Goldman Sachs.
General Dynamics Corporation (NYSE: GD) Cut to Perform at Oppenheimer.
General Electric Co. (NYSE: GE) Reiterated Buy with $22 Target at Argus.
Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) Started as Perform at Williams Capital.
Inergy Midstream, L.P. (NYSE: NRGM) Started as Outperform with $26 target at Credit Suisse.
Illinois Tool Works Inc. (NYSE: ITW) Raised to Buy at BofA/ML.
Lam Research Corporation (NASDAQ: LRCX) Maintained Outperform with $56 target price at Credit Suisse.
Life Technologies Corporation (NASDAQ: LIFE) Raised To Outperform From Market Perform By Leerink Swann
Netflix, Inc. (NASDAQ: NFLX) Raised to Buy at Citigroup; Maintained Outperform and raised target to $125 at Credit Suisse.
NVIDIA Corporation (NASDAQ: NVDA) Raised to Positive at Susquehanna.
Ryanair Holdings plc (NASDAQ: RYAAY) Cut to Neutral at Nomura.
Vale S.A. (NYSE: VALE) Cut to Hold at Deutsche Bank.

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JON C. OGG

The companies are complementary, each specializing in a different bit of the chip equipment making business. Some chip makers, notably Intel Corp. (NASDAQ: INTC) and Texas Instruments Inc. (NYSE: TXN) have lowered guidance for 2012, and sales estimates for the chip industry are nearly -20% lower next year. A single company offering a wider range of equipment has a better chance of surviving than do two smaller, more specialized firms.

Lam has also said that it will begin buying back up to $1.6 billion in stock following the close of the transaction, which is expected to happen in the second quarter of 2012. Lam expects the buyback program to be completed within 12 months.

The cleverly structured deal is tax-free to shareholders and the buyback program means that Lam is paying about 48% of the acquisition price in cash. When the deal closes, Lam shareholders will own about 59% of the new company and Novellus shareholders will own about 41%. The surviving company will retain the Lam name.

Foreign investment in China drops for the first time in 28 months. (Reuters)

Holiday sales continue to tick higher, according to the National Retail Federation. (Reuters)

Sony (NYSE: SNE) confirms its 2011 and 2012 targets for PS3 sales. (Reuters)

Amazon.com (NASDAQ: AMZN) shares lose 2011 gains because of concerns about margins. (Reuters)

Lam Research (NASDAQ: LRCX) to buy Novellus Systems (NASDAQ: NVLS) for $3.3 billion. (Reuters)

The SEC will try to appeal a federal ruling that blocked a settlement with Citigroup  (NYSE: C) over toxic mortgage debt.  (WSJ)

Wage increases in China cause the costs of its exports to the U.S. to rise. (WSJ)

Research In Motion (NASDAQ: RIMM) is under pressure to replace senior management. (WSJ)

Shares of Groupon (NASDAQ: GRPN) fall as research firms cut ratings. (WSJ)

Nokia (NYSE: NOK) returns to the U.S. with a $50 smartphone with T-Mobile service. (WSJ)

E-book prices rise quickly. (WSJ)

EU leaders continue to move away from the solid front they had last week. (WSJ)

The NFL signs new nine-year deals with Fox, NBC and CBS, which will pay an average of 65% more than their previous arrangements. (WSJ)

More oil companies seek leases for Gulf of Mexico drilling. (WSJ)

Brazil will try to shutter the operations of Chevron (NYSE: CVX) and Transocean (NYSE: RIG) as the government attempts to collect $11 billion over leak damages. (WSJ)

First Solar (NASDAQ: FSLR) sharply cuts forecasts. (WSJ)

LightSquared’s high-speed internet would hurt GPS signals, according to the federal government. (WSJ)

Credit Agricole sharply cuts expenses in the face of the EU crisis. (WSJ)

Detroit sells $484 million in bonds but at very high rates. (WSJ)

Charles Schwab (NYSE: SCHW) and E*Trade Financial (NASDAQ: ETFC) are hurt by drops in trading volume. (WSJ)

China puts tariffs on U.S. cars with large engines. (NYT)

OPEC increases output levels. (NYT)

IBM (NYSE: IBM) settles an antitrust case with the EU. (NYT)

Foreign-owned banks in the U.S. are losing deposits on a flight to safety. (FT)

Douglas A. McIntyre

24/7 Wall St. has compiled detailed earnings previews for the following companies: Novellus Systems Inc. (NASDAQ: NVLS); Alcoa Inc. (NYSE: AA); ADTRAN Inc. (NASDAQ: ADTN); Host Hotels and Resorts Inc. (NYSE: HST); Pepsico Inc. (NYSE: PEP); Google Inc. (NASDAQ: GOOG); J. B. Hunt Transport Services Inc. (NASDAQ: JBHT); J.P. Morgan Chase & Co. (NYSE: JPM); Safeway Inc. (NYSE: SWY); and Mattel Inc. (NASDAQ: MAT).

Some of these companies will not really seem on the surface to be sector-movers or market-moving companies, but these have been selected because they are the first ones of their peer groups to be reporting earnings. 

We have created a detailed earnings preview for each with consensus estimates from Thomson Reuters and added color in on each for investors to see what exactly is worth consideration this earnings season.  We have also added in recent price history and named where to look for additonal action (or fallout).

Monday, October 10

Novellus Systems Inc. (NASDAQ: NVLS) is the first chip equipment player to report for this earnings season.  it has been a few weeks since we have had earnings reports or guidance in the sector so we will be paying close attention since so many companies that are chip equipment customers have talked down their numbers in recent weeks.  Our belief is that expectations are very low for the quarter ahead. Estimates are $0.68 EPS and $311.9 million in revenue; next quarter estimates are $0.50 EPS and $278.5 million in revenue.  With shares hovering around $30.00 on Friday, the 52-week range is $25.26 to $41.82 and shares were above $36 in early July.  After Novellus reports, we would be watching the following: Applied Materials Inc. (NASDAQ: AMAT), KLA-Tencor Corporation (NASDAQ: KLAC), and Lam Research Corporation (NASDAQ: LRCX).

Tuesday, October 11

Alcoa Inc. (NYSE: AA) has already talked down aluminum prices and we have already seen slowing demand out of China talked about by many sectors.  Alcoa keeps maintaining that it can double its business by 2020 and we do not expect that to be changed by management even if it guides lower expectations ahead.  Estimates are $0.23 EPS and $6.24 billion in revenue; next quarter estimates are $0.23 EPS and $6.11 billion in revenue. At $9.80 on Friday, the 52-week range is $8.45 to $19.47 and this one was above $16 at the start of July.  There are many metals stocks to watch, some in aluminum and some in other metals: Century Aluminum Co. (NASDAQ: CENX), Reliance Steel & Aluminum Co. (NYSE: RS); Kaiser Aluminum Corporation (NASDAQ: KALU); Titanium Metals Corporation (NYSE: TIE); and Nucor Corporation (NYSE: NUE).

Apple Inc. (NASDAQ: AAPL) Started as Buy with $495 target at Janney.
Caterpillar Inc. (NYSE: CAT) Started as Overweight at Barclays.
Charter Communications Inc. (NASDAQ: CHTR) Started as Overweight at JPMorgan.
Colgate-Palmolive Co. (NYSE: CL) Cut to Hold at Citigroup.
Comcast Corporation (NASDAQ: CMCSA) Started as Overweight at JPMorgan.
Comerica Incorporated (NYSE: CMA) Raised to Market Perform at Wells Fargo.
Deere & Co. (NYSE: DE)  Started as Overweight at Barclays.
DIRECTV (NASDAQ: DTV) Started as Overweight at JPMorgan.
Imperial Holdings, LLC (NYSE: IFT) Cut to Market Perform at FBR.
Kimberly-Clark Corporation (NYSE: KMB) Cut to Hold at Citigroup.
Lam Research Corporation (NASDAQ: LRCX) Started as Overweight at JPMorgan.
Men’s Wearhouse Inc. (NYSE: MW) named value stock of the day at Zacks.
Novellus Systems, Inc. (NASDAQ: NVLS) Started as Overweight at JPMorgan.
NutriSystem Inc. (NASDAQ: NTRI) Started as Buy at Auriga.
Polo Ralph Lauren Corp. (NYSE: RL) Cut to Hold at Citigroup.
Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) Started as Buy at Canaccord Genuity.
VeriFone Systems, Inc (NYSE: PAY) Started as Buy at Argus.
Warner Chilcott plc (NASDAQ: WCRX) Started as Buy at Canaccord Genuity.

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JON C. OGG

Applied Materials Inc. (NASDAQ: AMAT) Cut to Sell at Goldman Sachs.
Avis Budget Group (NYSE: CAR) named as Bull of the Day at Zacks.
Bristol-Myers Squibb Company (NYSE: BMY) Raised to Buy at Jefferies.
Broadcom Corporation (NASDAQ: BRCM) Raised to Outperform at William Blair.
Citi Trends, Inc. (NASDAQ: CTRN) named as Bear of the Day at Zacks.
Colgate-Palmolive Co. (NYSE: CL) Added to Focus 1 List at BofA/ML.
Enbridge Inc. (NYSE: ENB) Started as Outperform at Scotia.
Huntsman Corporation (NYSE: HUN) Reinstated as Neutral at BofA/ML.
Lam Research Corporation (NASDAQ: LRCX) Cut to Neutral at Goldman Sachs.
Micron Technology Inc. (NASDAQ: MU) Raised to Neutral at Goldman Sachs.
Pier 1 Imports, Inc. (NYSE: PIR) Raised to Buy at KeyBanc.
Renren Inc. (NYSE: RENN) Started as Underperform at Macquarie.
Telefonica, S.A. (NYSE: TEF) Raised to Buy at UBS.

See last week’s top analyst calls here.

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JON C. OGG

Value for the sake of value may never seem like a true catalyst on the surface. In fact, it usually requires an outside economic event or an internal event that creates that next catalyst. All value investors know two things for long-term picks: first is that the value has to be cheap enough to be worth what may be a very long wait, and second is that when the catalyst arises much of that great opportunity may have already been missed. The town crier may be telling you that many of the great tech stocks are just too cheap today, even if there is a lack of catalysts and even if there is no assurance that the absolute bottom has been seen in the market. One upcoming catalyst could be the calendar: investors have historically preferred to buy technology shares shortly ahead of the fourth quarter.

The old rule of thumb is that stocks should trade at roughly 15-times earnings, with a premium or discount applied to growth and to certain industries. That number may be 12-times or 13-times earnings now. Most value investors also use 3.0-times book value as the basic line for “value.” 24/7 Wall St. has found 12 great technology giants at steep market discounts that are all rather well-known with long histories, they trade at less than 10-times current earnings, they also trade at less than 10-times forward earnings, they have large cash balances, most are at very low multiples of book value, and they are all down considerably from recent highs and highs of the past five years.

The late-summer technology value picks are as follows: Applied Materials Inc. (NASDAQ: AMAT); Computer Sciences Corporation (NYSE: CSC); Corning Inc. (NYSE: GLW); Dell Inc. (NASDAQ: DELL); Hewlett-Packard Co. (NYSE: HPQ); Intel Corporation (NASDAQ: INTC); KLA-Tencor Corporation (NASDAQ: KLAC); Lam Research Corporation (NASDAQ: LRCX); Microsoft Corporation (NASDAQ: MSFT); Micron Technology Inc. (NASDAQ: MU); SanDisk Corporation (NASDAQ: SNDK); and Western Digital Corporation (NYSE: WDC).

Looking for value is usually tricky as there is generally a reason for such a low valuation. Earnings that make up that P/E might not live up to expectations, cash reserves can be chewed up, analysts often change their targets and many fail to trust that the value is reflecting uncertainty in the markets. This will show you the good and the bad in these uncanny technology values.

Applied Materials Inc. (NASDAQ: AMAT) is the king of chip cap-ex and it carries a $15 billion market value. The company usually trades with a lower-than-market earnings multiple, but as the leader this one has always managed to come back. The stock trades at only about 9.6-times current earnings and trades at about 8.7-times forward earnings. It also trades at only about 1.8-times book value, it carries little long-term debt, and its cash and investments are listed as being close to $4.6 billion combined. It also carries a 3% dividend yield. At $11.44, the 52-week trading range is $10.27 to $16.93 and this was above $22 back in 2007 and shares went under $9.00 at the selling zeniths of late-2008 and early-2009.