Why NXP Semiconductors Could Double

• NXP Semiconductors NV NXPI is down more than 15 percent over the past three months.
• Stacy Rasgon, analyst with Sanford Bernstein, said that NXP Semiconductors has slipped along with general weakness in semis and macro concerns, a decline that is unwarranted.
• Rasgon also named NXP Semiconductors a "Best of Bernstein" top pick on the long side in the industry, noting that the stock could double within five years.

For investors with a one-to-three-year time horizon, Bernstein's Stacy Rasgon recommended NXP Semiconductors – suggesting that the stock can gain 50 percent to $133 by the end of 2016. Rasgon's thesis is that the recent declines have neglected the fact that NXP's combination with Freescale Semiconductor Ltd FSL is "underappreciated" and will lead to $9 or $10 in earnings power within 18 months.

But, more importantly, Rasgon said that for investors with a longer time horizon, she believes "a case could be made for it to double in value" within five years. That price appreciation would happen through "a combination of reasonable growth and reasonable multiple."

Further, Rasgon said that NXP will not be drug lower by China and macro concerns, with expectations that the company has "exposure to diverse and fast-growing end markets." Translated to the business, this means that "above-market growth is achievable," while the diversified nature of the business will provide some "defense."

Though down most recently, the stock has gained more than 17 percent this year, outperforming the PHLX Semiconductor SOX by more than 25 percent.