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On Oct 5, Zacks Investment Research upgraded Freescale Semiconductor, Ltd. (FSL - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

The embedded processing solutions provider Freescale Semiconductor has delivered positive earnings surprises in the last 4 quarters with an average beat of 52.5%. The long-term sales growth of the company is 25.0%.

The consistent performance has prompted the company to revise its gross margin expectation for the third quarter. Freescale Semiconductor expects its gross margin in the third quarter to expand by 75 to 100 basis points on a sequential basis.

Last month, Freescale Semiconductor Japan Ltd, and ROHM Co. Ltd. joined forces to provide comprehensive solutions for the Japanese and worldwide automotive markets. This deal will benefit the company going forward.

In addition, consistent capital outlay will enable the company to develop new technology and provide better solutions to its clients. In the previous quarter Freescale Semiconductor invested $40 million in development activities.

The Zacks Consensus Estimate for 2013 increased 3% in the last 60 days to 34 cents per share, reflecting year-over-year growth of 237.3%. For 2014, the consensus increased 1.5% over the same time period to $1.36 per share, reflecting growth of 295.6%.
Other Stocks to Consider

Besides Freescale Semiconductor, a few other companies in the sector are also performing well and have a favorable Zacks Rank. The stocks worth considering are Cirrus Logic Inc. (CRUS - Snapshot Report), Semiconductor Manufacturing International Corp. (SMI - Snapshot Report) and Aeroflex Holding Corp. (ARX - Snapshot Report). Cirrus Logic and Semiconductor Manufacturing International have a Zacks Rank #1 (Strong Buy) while Aeroflex Holding has a Zacks Rank #2 (Buy).

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