If there was one segment that has had a great 2016, it is the semiconductors. After a slight pause in the first half of the year, the PHLX Semiconductor Sector Index (SOX), which tracks the top chip stocks, had its best second-half relative performance in over a decade. With valuations also the highest in a decade, there is a conundrum for investors who want to stay involved: sell now and look for the market to back up, or stay in but be very selective.

In a new research report, the outstanding team of chip analysts at Deutsche Bank remain neutral on the stocks due to the elevated valuation, but they do stress the importance of selectivity. They also favor what they call “reasonably valued self-help,” or companies that can help profitability via either mergers and acquisitions or internal organic growth.

Five stocks are rated Top Picks at Deutsche Bank, and all make good sense for aggressive accounts looking to stay long the chip area.

Broadcom

This stock has been on a roll this year and is expected to trade even higher. Broadcom Ltd. (NASDAQ: AVGO) is a leading designer, developer and global supplier of a broad range of analog and digital semiconductor connectivity solutions. Its extensive product portfolio serves four primary end markets: wired infrastructure, wireless communications, enterprise storage and industrial and other.

Applications for the company’s products in these end markets include data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems and displays.

The company produces radio frequency (RF) front-end for LTE-enabled Apple products. Wall Street estimates that the company does 15% of its total business with Apple. Top Wall Street analysts like the leadership in the mobile, data center and broadband markets, and especially in the RF arena. Many on Wall Street see a cyclical rebound in industrial and communications demand.

The analysts noted in their report:

We view this discount to high-quality peers as an appropriate valuation as it reflects Broadcom’s leadership positions in Wired/Wireless Communications as well as its strong profitability (target Gross margins/Operating margins of 60%+/45%, respectively), somewhat offset by the company’s customer concentration (Apple 20%) and higher debt load.

Broadcom investors receive a 2.3% dividend. The Deutsche Bank price target for the stock is $225. The Wall Street consensus price target is $211.45. Shares closed Wednesday at $177.62.

Maxim Integrated Products

This company supplies chips to Samsung for the Galaxy line. Maxim Integrated Products Inc. (NASDAQ: MXIM) designs, develops, manufactures and markets various linear and mixed-signal integrated circuits worldwide. The company also provides a range of high-frequency process technologies and capabilities for use in custom designs. It primarily serves automotive, communications and data center, computing, consumer and industrial markets.

Deutsche Bank noted:

Our price target is based on an ex-cash P/E of ~19x our calendar year 2017 estimated earnings-per-share, in line with high-quality Analog peers to reflect Maxims accelerating revenue growth, improving profitability, and overall solid execution. The company’s still viable take-out potential and ~3% dividend yield, coupled with elevated peer valuations, also support our target multiple.

Shareholders receive a 3.4% dividend. Deutsche Bank has a $45 price target, and the consensus target is $42.02. Shares closed at $38.64 yesterday.

MaxLinear

This smaller cap player could provide big upside for investors. MaxLinear Inc. (NYSE: MXL) is a global provider of integrated, radio frequency and mixed-signal integrated circuits and systems-on-a-chips (SoCs). The company is a pioneer in multimedia over coax alliance (MoCA) technology and its products serve broadband communications and infrastructure industries, including cable TV, satellite TV, data center, metro and long-haul optical transport network applications.

The stock is at a discount to peers and is another company that could be a very viable takeover candidate. In addition, the company recently announced a partnership with Celeno Communications, a leading provider of high-performance Wi-Fi silicon and software solutions, to jointly developed reference design that combines the best in MoCA and Wi-Fi home network technologies to enable whole home gigabit Wi-Fi.

The $30 Deutsche Bank price target compares with the consensus estimate of $25.90. The stock closed on Wednesday at $20.88.

Microsemi

This company could benefit from continued industrial demand, and it is another Top Pick at Deutsche Bank. Microsemi Corp. (NASDAQ: MSCC) offers a comprehensive portfolio of semiconductor and system solutions for communications, defense and security, aerospace and industrial markets.

Products include high-performance and radiation-hardened analog mixed-signal integrated circuits (ICs), power management products; timing and synchronization devices and precise time solutions, setting the world’s standard for time; voice processing devices; RF solutions; security technologies and scalable anti-tamper products; Ethernet solutions; Power-over-Ethernet ICs and midspans.

At the company’s most recent Investor Day, Microsemi raised some of its long-term financial forecasts. It expects business to grow organically at 6% to 8% a year and revenues to increase more than $2 billion by 2020. The company also increased its gross and operating margins expectations to 60% or more and 35%, respectively, from 60% and 30% projected earlier.

The company also reviewed a few key areas of growth, and it now expects storage and data center, Ethernet, precise timing ICs, optical transport network processors, aerospace and field-programmable gate arrays to be the catalysts for future continued growth.

While it hasn’t actually announced a deal, the company is said to be running a sale process after receiving takeover interest from Skyworks Solutions. According to people familiar with the matter, Microsemi has hired Bank of Montreal to run a broader auction after Skyworks offered to buy the company. The process appears to be in the early stages, no deal is imminent and a transaction may not occur.

The Deutsche Bank price target is $60. The consensus target is posted at $49.20. The shares closed yesterday at $54.70.

On Semiconductor

This smaller capitalization stock may be just the ticket for more aggressive accounts. On Semiconductor Corp. (NASDAQ: ON) manufactures and sells semiconductor components for various electronic devices worldwide. Its Application Products Group segment provides analog, mixed-signal and advanced logic application specific integrated circuit and application specific standard product solutions; and solutions for voltage and current options, as well as foundry and manufacturing services, including integrated passive devices technology, integrated circuit (IC) design, packaging, and silicon technology offerings.

The company’s Sigfox portfolio provides an important enabler for the implementation and proliferation of Internet of Things applications across an almost limitless number of market sectors, including smart energy. The portfolio includes certified modules with protocol software stacks, transceivers, microcontrollers and SoC solutions. In addition, a range of hardware and software development tools are available to help speed and ease new designs for customers.

Deutsche Bank has a $15 price objective. The consensus target is set at $14.22. Shares closed yesterday at $12.48.

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Clearly these would all be more attractive if the market would back up some. Investors may want to buy partial positions here and see if some of the big post-election gains don’t get digested.

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