Sometimes the best moves occur when there is no promotion whatsoever. The stocks just go up nicely on their own.
Right now that's exactly what is happening with the semiconductor stocks. They are starting to make major breakout moves on nothing -- no news, no data points, no analysts' pushes. That kind of spontaneous combustion would be something I would look for at my old hedge fund because I would sense that the analysts would find reasons to recommend them when they could figure out something positive to say.
First, we have to take note of Intel (INTC), which has been quietly moving up, ever so slightly, almost unnoticeably, but certainly worth considering. Intel's long been linked, if not totally enmeshed, with personal computers, a category that's very challenged for all those who are in it.
But it's much more challenged for a company like HP Inc. (HPQ), which makes them, than it is for Intel, which makes the processors inside. Remember on the recent conference call, the company hinted at a bottom being put in for personal computers. More important, Altera (ALTR), a high-end semiconductor company with huge exposure to communications, is going to be part of the Intel mix and that's going to lead to a new, higher growth profile for the company. I think Intel will be a changed story, and it will get "rerated," meaning analysts are going to rally behind the stock because it is no longer a one-trick pony.
Then there's Analog Devices (ADI) and Integrated Device Technologies (IDTI), both of which reported terrific quarters and saw estimates bump nicely. When I spoke recently to Integrated Device CEO Greg Waters, I was pleasantly surprised to see him both making an acquisition that extends the company's reach to automotive and industrial applications, not just communications chips, and making a commitment to buying back stock. IDTI's a winner. Then there's Texas Instruments (TXN), which gave a terrific outlook for 2016 when it reported not that long ago. Yes, the company might make an acquisition to broaden its range of product. I think in this market that would be well received.
Then there are the semi stocks that have been in the doghouse for ages: Avago (AVGO), NXP Semi (NXPI), Skyworks Solutions (SWKS) and Qorvo (QRVO). (Read Bruce Kamich's chart analysis of Avago, Skyworks, Qorvo and Cypress (CY).) All four were darlings when cellphones were viewed as growth vehicles, but the market turned on them with a vengeance when the collective intelligentsia decided that cellphones had become a saturated category. (Skyworks Solutions is part of TheStreet's Growth Seeker portfolio. Qorvo is part of the Trifecta Stocks portfolio.)
I think these stocks are all starting to wake up from their nightmarish slides. Avago's closing on its deal with Broadcom (BRCM) and NXP's finishing its deal with Freescale (FSL), which will give analysts good reasons to push both stocks as they, too, will no longer be pigeonholed as simple plays on Apple's (AAPL) phones. (Apple is part of TheStreet's Action Alerts PLUS portfolio.)
I think Qorvo and Skyworks will be swept up for the ride, the former having stumbled once but I don't think will do so again, and the latter no longer involved in merger talks and instead is an active buyer of its own stock.
I like the way Cirrus (CRUS) is acting, as you should, because it had a terrific quarter. Can Cypress (CY) really stay down here much longer? I don't think so. The stock of Xilinx (XLNX) keeps being buoyed by takeover rumors. Perhaps where there is smoke there is fire.
Finally, there's semiconductor capital equipment maker Lam Research (LRCX). The company's CEO, Martin Anstice, recently came on Mad Money and told a terrific growth story, one that couldn't be happening if all these companies weren't doing great things and expanding their businesses.
Only Micron (MU) and Qualcomm (QCOM) have really failed to rally here. I think with all these good ones, there's no real need to go down the food chain.
In short, the semis are back, and they can be a real leadership group. Bet with them, not against them, and I think you will do just fine into the year's home stretch.
