Market Overview

Top-Performing Tech Dividend Payers with the Most Upside Potential (IMOS, HMIX, STM)

It is not unusual for stocks on a tear to overrun their mean price targets, which is a estimate of how far analysts on average expect the share price to climb.

Some of the top-performing technology stocks over the past six months that pay dividends, such as Hewlett-Packard (NYSE: HPQ), Western Digital (NASDAQ: WDC) and Seagate Technologies (NASDAQ: STX), have done just that. Others are at or near their mean price targets.

But analysts believe that ChipMOS Technologies (Bermuda) (NASDAQ: IMOS), Himax Technologies (NASDAQ: HIMX) and STMicroelectronics (NYSE: STM) still have some room to run, despite rising more than 49 percent in the past six months.

ChipMOS Technologies

This Taiwan-based provider of semiconductor testing and assembly services sports a market capitalization of about $535 million. It has a dividend yield of about 0.8 percent. But note that its price-to-earnings (P/E) ratio is higher than the industry average, and the return on equity is less than five percent.

The short interest in ChipMOS Technologies was less than three percent of the float as of the May 15 settlement date, the lowest number of shares sold short since mid-January, after declining more than 30 percent in the previous two periods. The days to cover was a little more than two.

Also note that there is just one analyst price target on record here, and it indicates more than 22 percent potential upside, relative to the current share price. That target represents a new multiyear high. Shares have not traded at that level since 2007.

The share price is up more than 55 percent since the beginning of the year, though it has met resistance at $18.50 for the past three weeks. Over the past six months, the stock has outperformed Advanced Semiconductor Engineering (NYSE: ASX) and Siliconware Precision Industries (NASDAQ: SPIL), as well as the broader markets.

Himax Technologies

This producer of semiconductors for flat panel displays has a market cap near $1 billion and a dividend yield of about 0.9 percent. The P/E ratio is lower than the industry average, and the long-term earnings per share (EPS) growth forecast is more than 28 percent. The operating margin is greater than the industry average.

The short interest in this Taiwanese company was less than two percent of the total float at mid-May. That was the greatest number of shares sold short in at least a year, on the greatest daily average volume in a year. Short interest has risen nearly 98 percent since the beginning of this year.

All three analysts surveyed by Thomson/First Call recommend buying shares, which has been their consensus recommendation for at least three months. And the analysts think shares have plenty of headroom, as their mean price target is almost 19 percent higher than the current share price. That consensus target would be a new multiyear high.

The share price is up more than 144 percent year-to-date, though it has retreated more than 10 percent from a recent 52-week high. Over the past six months, the stock has outperformed the broader markets and the likes of Maxim Integrated Products (NASDAQ: MXIM) and NXP Semiconductors (NASDAQ: NXPI).

STMicroelectronics

This Swiss maker of semiconductors and discrete devices is headquartered in Geneva, and it has a market cap of more than $8 billion. Its dividend yield is near 3.7 percent. The forward earnings multiple is lower than the industry average, but the operating margin and the return on equity are in negative territory.

The number of shares sold short as of the most recent settlement date represented less than one percent of the total float, but that was the highest level of short interest in the past year. Short interest grew almost 32 percent in the previous month. The days to cover increased to more than four.

All six analysts polled recommend buying STMicroelectronics, with half of them rating shares at Strong Buy. The mean price target indicates that the analysts see about 15 percent more upside potential. Shares have not traded in the neighborhood of that consensus target since May of 2011.

Though the share price is around 29 percent higher than at the beginning of the year, shares have pulled back less than three percent from the recent 52-week high. The stock has outperformed competitors NXP Semiconductors and Texas Instruments (NASDAQ: TXN), as well as the broader markets, over the past six months.

Posted-In: Advanced Semiconductor Engineering ChipMOS Technologies hewlett-packardLong Ideas News Short Ideas Dividends Trading Ideas Best of Benzinga

 

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