Top Performer for Thurs: Nat'l Semiconductor (NSM)

As has been reported previously on Zacks.com, the chip industry may very well be in the early stages of a recovery. (See "Q2 Results Show Chip Recovery".) Of the 231 stocks on today's Zacks #1 Rank List, six of them are from the electronic components-semiconductors industry.

Today, we'll be focusing on National Semiconductor Corporation (NSM - Analyst Report), which is a Zacks #1 Rank Top Performer with a gain of about 5%. Volume is at 4 million shares, which is below the daily average of 6.5 million.

The Zacks Consensus Estimate for this fiscal year, which ends in May 2010, is up 11.8% over the past 2 months to 38 cents per share. There are 21 covering analysts for the period.

Next fiscal year doesn't end until May 2011, but the Zacks Consensus Estimate for now stands at 62 cents, accounting for no change in the past 2 months but a 44% improvement over the past 3 months from 43 cents. Analysts, therefore, expect profit growth of more than 60% year over year.

Fiscal Fourth Quarter

In June, NSM announced fiscal fourth-quarter results that included year-over-year declines in EPS and sales, which was very common for semiconductor companies. However, NSM was able to surpass the Zacks Consensus Estimate, and said that business conditions improved through the quarter.

The company lost 26 cents in the quarter; far below the profit a year ago of 35 cents. But analysts were expecting a loss of 44 cents, thereby creating a surprise of nearly 41%.

Sales of $281 million were down 4% sequentially and 39% year over year. Total company bookings were up 30% from the immediately preceding quarter, due to increased orders of wireless handsets and other personal mobile devices, as well as increased bookings from distributors.

NSM expects fiscal first-quarter sales to gain between 2% and 9% from the fiscal fourth quarter.

5 Other Zacks #1 Rank Semi Stocks

July was a good month for the semiconductor industry. As highlighted in the Industry Rank article linked above, analysts increased their earnings projections on 55 chip makers during the month.

Therefore, it's understandable why this industry is rather well represented on the Zacks #1 Rank List. In addition to NSM, other semiconductor companies on the List include Cabot Microelectronics Corporation (CCMP - Snapshot Report), DSP Group, Inc. (DSPG - Snapshot Report), LSI Corporation (LSI - Analyst Report), Standard Microsystems Corporation (SMSX) and TriQuint Semiconductor, Inc. (TQNT - Analyst Report).