While Apple Inc. (NASDAQ: AAPL) is a dominant technology player, it also tends to have peaks and valleys in its various business lines, which can expose vendors to inconsistent orders and earnings. Plus, the company announced recently it is planning to use its own chips in Macintosh computers starting in 2020. So for technology investors looking to stay on what has been a very hot semiconductor ride, it may make sense to focus on companies with little or no exposure to Apple.
We screened the Merrill Lynch research database for semiconductor stocks rated Buy that have far less exposure to Apple, and found five companies that look like outstanding buys right now. While they do have an ongoing Apple presence, lower iPhone X sales should not be an issue. Merrill Lynch lowered Apple supplier estimates on Friday.
The industry also was hit on Friday as Taiwan Semiconductor Manufacturing cut forward guidance, a cut many feel is a result of slowing business from Apple. So investors are being offered nice entry points.
This stock could very well benefit from an increase in information technology (IT) spending. Analog Devices Inc. (NASDAQ: ADI) is a leader in the design, manufacture and marketing of analog, mixed-signal and digital signal processing integrated circuits (ICs) for use in industrial, automotive, consumer and communication markets worldwide. It offers signal processing products that convert, condition and process real-world phenomena, such as temperature, pressure, sound, light, speed and motion, into electrical signals.
Last year the company introduced a highly integrated polyphase analog front end with power quality analysis designed to help extend the health and life of industrial equipment while saving developers significant time and cost over custom solutions. Achieving extremely accurate, high-performance power quality monitoring typically requires customized development, which can be expensive and time-consuming.
The analysts believe that the Linear Technology acquisition, which closed earlier this year, is a huge positive. In addition, many on Wall Street expect that corporate management ultimately will exceed its $150 million of targeted synergies.
Analog Devices investors are paid a solid 2.14% dividend. The Merrill Lynch price target for the stock is $110. The Wall Street consensus price target was last seen at $103.14. The stock closed Friday’s trading at $89.76 per share.
This stock traded is offering a fantastic entry point for investors looking to add shares. Cypress Semiconductor Corp. (NASDAQ: CY) manufactures and sells embedded system solutions for the automotive, industrial, home automation and appliances, consumer electronics and medical markets.
Its product portfolio includes programmable-systems-on-chip (PSoC), general purpose microcontrollers, analog ICs, USB controllers, connectivity chips (Bluetooth, Wi-Fi, Zigbee) and memory chips. The company has limited exposure to Apple as the automotive market is driving sales growth.
Cypress shareholders are paid a 2.66% dividend. Merrill Lynch has a price objective of $22, which compares with a $20.15 consensus price target. The shares closed at $16.20 apiece on Friday.