Brean Capital's Top Semiconductor & Tech Hardware Stocks

In a recent report, Brean Capital provided an update on Asian semiconductor and tech hardware sales. Their numbers indicate a strong quarter in the space, with 12 of the 14 sectors outperforming.

Mobile And Communications Semiconductors

Analysts saw strong December performance out of Apple Inc. AAPL suppliers such as Foxconn, Hon Hai, Catcher and Pentagon. However, mixed month-over-month numbers after a record-setting November could be an indication that the Apple ramp-up from iPhone 6 is slowing.

Brean is now projecting 74 percent year-over-year growth in RF TAM in China, which they consider to be a conservative estimate, given the $3.50 average RF content per device.

Tech Hardware

Despite soft December shipment numbers, PC revenue was higher than expected for the month. Analysts forecast 81-82 million PC unit shipments for 4Q14, a quarter-over-quarter increase of one to two million units. This estimate is higher than the consensus estimate of flat shipment numbers. In addition, Brean predicts 74-76 million PC unit shipments in 1Q15 and 73-75 million shipments in 2Q15. Analysts estimate 300 to 305 million total shipments for 2015, but point out that many large customers are likely to undergo Windows XP PC refreshing in 2015, which could boost shipment numbers.

Stock Picks

In the PC hardware space, analysts like current valuations based on enterprise value to free cash flow (EV/FCF) numbers. They see gross margin expansion of 1 to 2 percent over the next few years providing a boost to already undervalued stocks.

Brean has Buy ratings on Western Digital Corp WDC, Hewlett-Packard Company HPQ, Seagate Technology PLC STX, Marvell Technology Group Ltd MRVL, NetApp Inc. NTAP and Qualcomm, Inc. QCOM.