Deutsche Bank Likes 5 Chip Stocks Into Q2 Results
Maxim Integrated Products
This company supplies some chips to Samsung for the red-hot Galaxy line. Maxim Integrated Products Inc. (NASDAQ: MXIM) designs, develops, manufactures and markets various linear and mixed-signal integrated circuits (ICs) 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.
The Deutsche Bank team has favored Maxim for some time as the company continues to generate significant cash and targets 80% payout ratio. The company’s dividend yield is near its five-year average, and the company has grown its dividend in each of the past six years. The favorable view is based on expectations of continued strong growth in automotive with solid double-digit year-over-year growth and continued strength in its industrial segment.
Shareholders receive a solid 2.73% dividend. The $65 Deutsche Bank price objective compares to a $61.38 consensus target price. The stock traded at $61.75 a share.
This small cap company is a strong contender in the data center arena. Inphi Corp. (NYSE: IPHI) provides high-speed analog and mixed signal semiconductor solutions for the communications, data center and computing markets worldwide.
Its end-to-end data transport platform delivers high signal integrity at leading-edge data speeds, addressing performance and bandwidth bottlenecks in networks, from fiber to memory. Inphi has solutions that minimize latency in computing environments and enable the roll-out of next-generation communications infrastructure.
The company announced in the spring that it is partnering with Innovium to provide customers multiple highly scalable industry-leading 100 G to 400 G data center solutions to meet their explosive bandwidth demand growth.
Deutsche Bank has set its price target at $37. The posted consensus target is $35.57, and the stock was trading at $32.60.
Monolithic Power Systems
This off-the-radar play could be offering continued upside potential. Monolithic Power Systems Inc. (NASDAQ: MPWR) designs, develops and markets integrated power semiconductor solutions and power delivery architectures for consumer, industrial, computing and storage, and communications market segments.
The company offers direct current (DC) to DC converter ICs used to convert and control voltages of various electronic systems, such as portable electronic devices, wireless LAN access points, computers, monitors, automobiles and medical equipment.
It also provides lighting control ICs for backlighting that are used in systems, which provide the light source for LCD panels in notebook computers, monitors, car navigation systems and televisions, as well as for general illumination applications. In addition, it offers alternating current (AC)/DC offline solutions for lighting illumination applications and AC/DC power conversion solutions for various end products that plug into a wall outlet.
Shareholders receive just a 0.9% dividend. The Deutsche Bank price objective is $150. The consensus target is $155.25, and the shares traded recently at $141.60 apiece.
Given the caution that Deutsche Bank has on the overall sector, it may make sense to put on partial positions here and see how investors respond to second-quarter reports. Given some of the current issues, it could be a “buy the rumor, sell the news” scenario.