For the first time in years, the PHLX Semiconductor Sector index (SOX) underperformed the S&P 500 in the second quarter, by 4%. This came despite reasonably good fundamentals for the industry, which were offset to a large degree due to the trade tensions with China and the threat of tariffs and a trade war. The question for investors is what stocks are a good bet, as second-quarter results for many companies are imminent.

In a new research report from the Deutsche Bank semiconductor team, while they feel that most companies in the industry can offer good second-quarter numbers and forward guidance, they are cautious overall.

The report noted this:

While we expect generally solid second quarter results and third quarter guides, we believe the ongoing macro/geopolitical concerns are likely to cap investor optimism toward the semi sector and potentially compound pre-existing peak-cycle fears. Consequently, we reiterate our view that semi investors should take a somewhat conservative posture, focusing on names with defensive attributes such as self-help-driven margin expansion potential and discount valuations.

The analysts are positive on five companies, with varying market capitalizations, into earnings, and shares of all are rated Buy at Deutsche Bank.

Large Cap

Intel

This semiconductor leader is working hard to focus more on Internet of Things and data center cloud spending and away from PCs. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide.

The company’s platforms are used in various computing applications, comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.

Intel announced the surprise resignation of the company’s chief executive officer recently while also pre-announcing second-quarter results, which came in above analysts’ expectations. Despite the good results, the startling resignation hit the stock and numerous top Wall Street analysts feel that investors should take advantage of the selling.

Intel investors are paid a solid 2.31% dividend. The Deutsche Bank price target for the shares is set at $64, and the Wall Street consensus price objective is $58.87. The shares traded early Thursday at $51.70. The stock is down almost 15% over the past month.

Mid Cap

Marvell Technology

Last year the company announced a bold $6 billion bid to buy Cavium. Marvell Technology Group Ltd. (NASDAQ: MRVL) is a fabless supplier of mixed-signal and analog semiconductor products to a number of storage, computing and communication applications, including hard disk drives, personal computers, servers, Ethernet switches, printers and connectivity markets.

Top analysts around Wall Street are very positive on the company’s purchase of Cavium, and many feel the deal adds significantly to the growth element for the stock. The addition also helps make Marvell solidly positioned in data center, cloud, enterprise, security and 5G.

The company has cleared the final hurdle to acquire Cavium, as it received the necessary approval from China’s State Administration for Market Regulation. The company expects to complete the merger this month, but the trade issues need to be watched.

Shareholders receive a 1.11% dividend. Deutsche Bank has a price target of $24, and the posted consensus price objective was last seen at $27.65. The stock traded at $21.55 Thursday morning.