Report
Dave Nicoski ...
  • Ross LaDuke
EUR 233.15 For Business Accounts Only

Insights: Bullish Stocks

Semiconductors breaking out -- add exposure/overweight

Relative strength for the PHLX Semiconductor index began a bottoming process in November of 2018. In mid-December, we pointed out that RS for the index was bottoming and making a bullish inflection, recommending XLNX and INTC. Since then we have expanded our recommendations substantially and upgraded Technology to overweight in late-January. Despite four months of outperformance, we believe the move for semis is just beginning. Below we lay out what we believe is a compelling case to add exposure at current levels.

• Tech is our favorite Sector. Technology is currently our only Sector overweight, and the equal-weighted Sector (RYT) is breaking out to all-time highs. Additionally, RS is breaking out to 20-year highs.

• Semis represent our favorite Groups within Tech. Within Technology, semis are internal leadership and are driving most of the Sector's outperformance. Equal-weighted semis (XSD) are breaking out to fresh price and RS highs and cap-weighted (SOXX, SMH) is not far behind.

• Add exposure/overweight semis. An attractive industry within an attractive sector, and breaking out to new highs. In today's report we highlight our favorite technical setups, including: AMAT, MRVL, AMBA, STM, ON, MU, NVDA, SWKS, MCHP, TXN, AVGO, LRCX, NXPI, ASML, TER, MKSI, ICHR, ACLS, and TSEM.
Underlyings
Ambarella Inc.

Applied Materials Inc.

Applied Materials provides manufacturing equipment, services and software to the semiconductor, display and related industries. The company's segments are: Semiconductor Systems, which develops, manufactures and sells a range of manufacturing equipment used to fabricate semiconductor chips; Applied Global Services, which provides integrated solutions to support equipment and fab performance and productivity; and Display and Adjacent Markets, which is comprised of products for manufacturing liquid crystal displays, organic light-emitting diodes and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices.

ASML Holding N.V.

Axcelis Technologies Inc.

Axcelis Technologies designs, manufactures and services ion implantation and other processing equipment used in the fabrication of semiconductor chips. The company also provides aftermarket lifecycle products and services, including used tools, spare parts, equipment upgrades, maintenance services and customer training. The company provides high energy, high current and medium current implanters for all application requirements. The company's Purion systems are all based on a common platform which enables a combination of implant purity, precision and productivity by combining a single wafer end station, with a spot beam architecture. The company's other products include curing systems, and thermal processing systems.

Ichor Holdings Ltd.

Lam Research Corporation

Lam Research is a supplier of wafer fabrication equipment and services to the semiconductor industry. The company designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. The company's customer base includes semiconductor memory, foundry, and integrated device manufacturers that make products such as non-volatile memory, dynamic random-access memory, and logic devices. The company's services include customer service, spares, improvement, and refurbishment of its deposition, etch, and clean products. The company sells its products and services to companies in the United States, China, Europe, Japan, Korea, Southeast Asia, and Taiwan.

Marvell Technology Group Ltd.

Marvell Technology Group is a semiconductor provider of application-specific products. The company is focused on the development of System-on-a-Chip devices, utilizing its technology portfolio of intellectual property in the areas of analog, mixed-signal, digital signal processing, and embedded and standalone integrated circuits. The company develops integrated hardware platforms along with software that incorporates digital computing technologies. In storage, the company is engaged in fibre channel products and data storage controller solutions spanning cloud, enterprise, edge and personal computing markets. The company's networking products include ethernet solutions, embedded processors and WiFi connectivity solutions.

Microchip Technology Incorporated

Microchip Technology develops, manufactures and sells semiconductor products. The company's product portfolio comprises general purpose and other eight-bit, 16-bit, 32-bit microcontrollers, 32-bit microprocessors, field-programmable gate array products, a range of linear, mixed-signal, power management, thermal management, discrete diodes, Metal Oxide Semiconductor Field Effect Transistors, radio frequency, timing, timing systems, safety, security, wired connectivity and wireless connectivity devices, serial Electrically Erasable Programmable Read Only Memory, Serial Flash memories, Parallel Flash memories, Serial Electrically Erasable Random Access Memory and serial Static Random Access Memory.

Micron Technology Inc.

Micron Technology provides memory and storage solutions. The company's portfolio of memory and storage technologies include Dynamic Random Access Memory, Not And, 3D XPoint? memory, and Not Or. The company's segments are: Compute and Networking Business, which includes memory products sold into client, cloud server, enterprise, graphics, and networking markets; Mobile Business, which includes memory products sold into smartphone and other mobile-device markets; Storage Business, which includes Solid-State Drives and component-level solutions sold into enterprise and cloud, client, and consumer storage markets; and Embedded Business, which includes memory and storage products.

NVIDIA Corporation

NVIDIA engages in graphics processing unit (GPU)-based visual computing and accelerated computing platforms. The company has two segments, GPU and Tegra Processor, which are based on a single underlying architecture. The company's GPU product brands are aimed at markets including GeForce for gamers; Quadro for designers; Tesla and DGX for artificial intelligence data scientists and big data researchers; and GRID for cloud-based visual computing users. The company's Tegra brand integrates an entire computer onto a single chip, and incorporates GPUs and multi-core CPUs to drive supercomputing for autonomous robots, drones, and cars, as well as for game consoles and mobile gaming and entertainment devices.

NXP Semiconductors NV

NXP Semiconductors is a holding company. Through its subsidiaries, Co. is engaged as a global semiconductor company and a long-standing supplier in the industry. Co. provides High-Performance Mixed-Signal and Standard Product solutions. Co.'s product solutions are used in automotive, identification, wireless infrastructure, lighting, industrial, mobile, consumer and computing applications. Co. engages with original equipment manufacturers (OEM) and sell products in all major geographic regions.

ON Semiconductor Corporation

ON Semiconductor is engaged in energy efficient electronics. The company is organized into three segments: Power Solutions Group, which provides a range of discrete, module and integrated semiconductor products; Analog Solutions Group, which designs and develops analog, mixed-signal, and advanced logic application specific integrated circuits and Application Specific Standard Product, and power solutions; and Image Sensor Group, which designs and develops complementary metal oxide semiconductor and charge-coupled device image sensors, as well as proximity sensors, image signal processors and actuator drivers for autofocus and image stabilization for automotive and industrial markets, among others.

Skyworks Solutions Inc.

Skyworks Solutions is a provider of analog semiconductors that connect people, places, and things, spanning a number of applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet and wearable markets. The company's product portfolio consists of various solutions, including: amplifiers, antenna tuners, attenuators, circulators/isolators, wireless analog system on chip, direct current (DC)/DC converters, demodulators, detectors, diodes, directional couplers, diversity receive modules, filters, front-end modules, hybrid, light emitting diode drivers, low noise amplifiers, mixers, and modulators.

STMicroelectronics N.V. ADS

Teradyne Inc.

Teradyne is a global supplier of automation equipment for test and industrial applications. The company designs, develops, manufactures and sells automatic test systems used to test semiconductors, wireless products, data storage and electronics systems in the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. The company's automatic test equipment and industrial automation products and services include: semiconductor test systems; defense/aerospace test instrumentation and systems, storage test systems, and circuit-board test and inspection systems; industrial automation products; and wireless test systems.

Texas Instruments Incorporated

Texas Instruments designs and makes semiconductors that it sells to electronics designers and manufacturers. The company has two reportable segments: Analog and Embedded Processing. The company's analog semiconductors change signals, such as sound, temperature, pressure or images to a stream of digital data. The company's analog segment primary product lines includes: power, signal chain, and high volume. The company's embedded processors are designed to handle specific tasks and can be optimized for various combinations of performance, power and cost, depending on the application. The company's embedded processing segment primary product lines includes: connected microcontrollers and processors.

Tower Semiconductor Ltd

Tower Semiconductor is a pure-play independent specialty foundry dedicated to the manufacturing of semiconductors. Typically, pure-play foundries do not offer products of their own, but focus on producing integrated circuits based on the design specifications of their customers. Co. manufactures semiconductors using advanced production processes for Co.'s customers primarily based on third party designs and Co.'s own proprietary designs. Co. offers the manufacture of integrated circuits with geometries ranging from 1.0 to 45-nanometers. Co. also provides design support and complementary technical services.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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