Atmel: A Stock to Look Out For
Cecil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The semi conductor sector has a lot of huge players, like Intel and TSM, who specialize in micro processors and related hardware. Atmel (NASDAQ: ATML), on the other hand, is a semi conductor company that deals with something else; micro controllers. In today’s radically advancing technological arena, these micro controllers play a very important role. One specific micro controller that was hugely responsible for these changes is the capacitive touch controller.
Over the last 2 years, touch screens have become an inevitable part of portable technology. Smart phones and tablets almost exclusively work based on this technology; all of this implies that touch screen technology is here to stay. Companies like Apple, Samsung, LG and Microsoft have a wide range of products based on touch screen interfaces. Recently Microsoft released its Surface tablets, which exclusively run on Windows Phone 8 and might enable Microsoft to cover some lost grounds.
In the laptop sector, Intel’s Ultrabook line of products aims to make laptops a lot thinner and portable. Another important point is that out of the 140 Ultrabooks to be released with Windows 8, 40 will be touch enabled. This means that touch screen as a technology is diversifying, which means manufacturers of that technology will profit., That's why investors should be paying attention to these stocks.
There are mainly three touch screen controller manufacturers: Atmel, Cypress Semiconductors, and Texas Instruments. Out of the three Atmel is by far the most promising stock; here’s why!
Atmel’s balance sheet is rock solid; the company has $245 million in cash and (astonishingly) no long term debts. From the three most promising stocks in this sector, Atmel alone has this distinction. Moreover, this stock is trading close to its 52-week low at $4.66. This stock is trading at a multi-year low; in 2011 this stock was priced $16, and in 2012 it was trading at $12. Atmel has a very promising P/E ratio of 12.81, and the earnings per share is $0.37; maybe not the strongest, but it sure is growing. With the boom in touch screen control, I expect this stock to hit a price of about $8 in 1 year’s time.
Cypress Semiconductors (NASDAQ: CY) has a rather week balance sheet when compared to Atmel; the company has $219 million in cash and has a long term debt of a staggering $198 million. Cypress Semiconductors still seems to be a little over priced at $10, even though its 52-week high is $20.50. Why do I say this? Well, to start off with, the P/E ratio is exorbitantly high at 45.05; such a high P/E ratio would imply that the stock is overpriced. To assert my point, the price to tangible book value is also very high at 7.38. An area that Cypress Semiconductors scores higher than Atmel would be in the dividend section; Cypress Semiconductors provide a decent dividend of $0.44 per share. I expect this stock to hit the $12 mark in about a year’s time.
Texas Instruments (NASDAQ: TXN) is by far the biggest company in the sector; they too have a rather weak balance sheet. They have $2.3 billion in cash and about $2.1 billion in debt. This stock is priced correctly right now. They trade at $28.9, their 52-week high is at $34.3. Moreover, Texas Instruments has an impressive P/E ratio at 18.48. The earnings are pretty high at $1.52 per share, and the stock pays out a hefty dividend at $0.84. In a year’s time, I expect this stock to hit about $29.
On a concluding note I feel that investing in Atmel would be a good option, as the company seems very promising.
ceciljohn2002 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Cypress Semiconductor . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.