Needham's Top Stock Picks For 2015
As 2014 comes to an end, many investors are starting to think about which stocks they should invest in at the start of 2015. In light of the New Year, 5-Star analyst Rajvindra Gill of Needham named five of his top technology stock picks for 2015.
Micron Technology, Inc. (NASDAQ: MU), best known for producing semiconductor devices, including DRAM, SDRAM, flash memory, and SSDs, had a great year posting record revenue of $16.4 billion, record net income of over $3 billion, and record free cash flow of $2.6 billion.
The technology company did so well that it earned Gill’s top stock pick for 2015.
Gill rated Micron with a Strong Buy and a $60 price target. The analyst believes that despite Micron’s considerable increase, the stock is still trading at a steeper discount than what they are worth, noting “Trading at only 9.0x our FY15 EPS estimate, Micron shares represent a steep discount to our peer group while participating in an industry with favorable demand drivers in both the NAND and DRAM markets.”
He continued, “On the supply side, we believe there continues to be fear of oversupply in the DRAM market, but that the three players (Micron, SK Hynix, and Samsung) are behaving more rationally than in the past.”
Gill has rated Micron ten times since December 2013, earning a 90 percent success rate recommending the stock.
Synaptics, Incorporated (NASDAQ: SYNA) develops human interface solutions for consumer electronics companies, such as, Apple Inc., Samsung, and Sony. The technology company earned Gill’s second top stock pick despite having “had a roller coaster of a year.”
Gil rated Synaptics with a Strong Buy and a $110 price target going into 2015 despite falling from around $90 a share to $60 a share after “details surrounding the acquisition’s near-term costs became visible.”
He reasoned, “We do not believe the market is fully accounting for the value in a single-chip touch and display integrated solution, which we believe will help transform SYNA into a platform company that dominates all the chips on the display motherboard (i.e., touch, fingerprint, display driver IC).”
Gil has rated Synaptics four times since April 2013, earning a 100 percent success rate recommending the stock.
Cypress Semiconductor Corporation (NASDAQ: CY), best known for its Bluetooth and touchscreen technology, earned Gill’s third top stock pick for 2015 following the company’s merger with Spansion.
The analyst recently upgraded the stock to Buy with a $16 price target, citing “While CY is up ~29 percent since the merger announcement, we do not believe the transaction‘s full value is priced into the stock. With each company manufacturing ~40 percent of its capacity internally, we see ample opportunity for consolidation into a single internal fab, as well as opportunities to reduce the number of test/assembly facilities globally.”
He continued, “We believe the complementary products of the two companies will result in a powerful portfolio of MCU, memory, analog and digital offerings.”
Gill has rated Cyprus ten times since June 2010, earning a 60 percent success rate recommending the stock.
Atmel Corporation (NASDAQ: ATML), known for designing semiconductors, earned Gill’s fourth top stock pick of 2015 after the company finished 2014 at about the same level as the beginning of the year.
Gill rated Atmel with a Buy with an $8.50 price target as he is encouraged “by the strategic direction the company is taking heading into 2015.”
He said, “We are excited to see Atmel focusing squarely on its MCU and connectivity offerings with the goal of capitalizing on the Internet of Things market, and the trend of growing semiconductor content in automotive and industrials… Financially, we see additional room in the model for gross margin expansion with modest revenue growth and believe the company could operate at a margin profile in the 52-55 percent range.”
Gill has rated Atmel four times since January 2012 with a 67 percent success rate recommending the stock.
Silicon Image, Inc. (NASDAQ: SIMG) provides semiconductors for mobile, consumer electronics and personal computers. The tech company earned Gill’s fifth top stock pick for 2015 after “SIMG shares finished the year up 12 percent, but have actually seen a large run-up over the last few months, increasing 52 percent since October 13.”
Gill rated Silicon Image with a Buy and a $7.50 price target, noting “We recently raised our price target on SIMG shares after the company announced a $7MM strategic investment in its services subsidiary from Qualcomm, valuing the division at $100MM.”
In addition, “Silicon Image recently announced it would be splitting its business into three segments by creating two wholly-owned subsidiaries… While the company stated its goal in splitting the business was to aid strategic partnerships and allow for strategic partnerships similar to what was agreed upon with Qualcomm, we continue to contend the company could represent an attractive acquisition target given its 60GHz business, and its services business.”
Gill has rated Silicon Image four times since May 2010, earning a 100 percent success rate recommending the stock.
Latest Ratings for MU
|Nov 2016||Deutsche Bank||Maintains||Buy|
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