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Mellanox Technologies, Tencent Holdings, Vishay Intertechnology, Cypress Semiconductor and ON Semiconductor highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – August 21, 2018 – Zacks Equity Research highlights Mellanox Technologies as the Bull of the Day, Tencent Holdings (TCEHY - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Vishay Intertechnology, Inc. (VSH - Free Report) , Cypress Semiconductor and ON Semiconductor (ON - Free Report) .
I last wrote about Mellanox Technologies as the Bull of the Day on July 17 before they reported their Q2 results, which included a 16% EPS beat, a 1.2% top line beat and raised guidance.
In short, this $4 billion provider of essential semiconductor-based, interconnect products to world-class server, storage, and data centers customers delivered the coveted "trifecta" in its quarterly performance.
Record quarterly revenue of $268.5 million was up 7% sequentially and 27% year-over-year. The company's ethernet revenue was up 81%, and ethernet switch revenue +114% annually.
Mellanox gave improved guidance for Q3 with revenue in a range of $270-$280 million, vs the consensus of $270 million. The company sees Q3 gross margins of 68.5%-69.5%.
Accordingly Mellanox raised this year's revenue projection to $1.065-$1.085 billion from $1.05-$1.07 billion. The company sees full-year gross margins at 68.5%-69.5%. Gross margins were lighter year over year with Q2 GM at 61.4% vs. 65.5% last year, so I think this guide for the full year helps a lot.
This paragraph in the press release from the CEO, Eyal Waldman, sums up the current state of business pretty well...
"We continue to see strong traction with our 25 gigabit per second and above solutions as they become the preferred solution of choice in hyperscale, cloud, high performance computing, artificial intelligence, storage, financial services and other markets across the globe. Our Ethernet revenue grew 81 percent year-over-year driven by network adapter and switch growth with hyperscale and OEM customers. We are proud to see our InfiniBand solutions accelerate the world's top three and four of the top five supercomputers, as seen in the recently published TOP500 supercomputers list. Our performance in the second quarter further shows the benefit of our investment in diversifying our revenue base and the operational focus that is driving our higher profitability."
Tencent Holdings is the giant Chinese Internet portal which provides mobile, telecom, entertainment, social media and financial services, and monetizes most of these with online advertising.
The stock has slipped to a Zacks #5 Rank because analysts took EPS estimates down for this year and next as trouble in China's economy begins to surface.
So why did it fall to the cellar of the Zacks Rank?
Because analysts lowered 2018 EPS projections 7% from $1.38 to $1.28 in the last 60 days.
And 2019 estimates were cut 10% from $1.85 to $1.65.
Additional content:
3 “Internet of Things” Stocks to Buy Right Now
Semiconductor stocks have been the subject of volatility so far this year, but the underlying business of this industry is growing—and should continue that trend in 2018 and beyond. Throughout the chip-making space, companies have successfully adapted to the changing needs of the consumer, including an increased demand for small, high-powered chips that enable “Internet of Things” (IoT) devices.
For those that don’t know, the Internet of Things is the growing world of interconnected household and industrial devices. Everyday products and machines can now be embedded with sensor technology to process data or interact with other electronic devices.
For example, consumer-level IoT products include things like Amazon’s Echo “smart speaker,” wearable motion and activity tracking products, and advanced in-car technology. On the commercial side of the IoT market, industrial manufacturers have begun implementing sensors into machines to track performance and efficiency.
As demand for the microchips that power these IoT devices continues to grow, semiconductor manufacturers with a focus on IoT products will continue to benefit. And 2018 promises to be another marquee year for these suppliers, with the number of connected devices worldwide set to continue its rapid growth.
With that said, we’ve found three already-strong stocks that are looking to benefit even more from further IoT growth in 2018:
1. Vishay Intertechnology, Inc.
Vishay Intertechnology is a global manufacturer and supplier of discrete semiconductors. The company has a broad portfolio of unique passive and active solutions that are tailored to the “things” being controlled in the IoT. Vishay markets its portfolio to manufacturers of everything from biometric monitoring systems to fitbands and smart appliances.
VSH is currently a Zacks Rank #1 (Strong Buy). The stock is solid growth option, with earnings and revenue expected to improve by 40 and 16%, respectively, this year. But VSH is also reasonably priced, and the stock’s P/E of 11.3 and PEG of 1.2 show that investors are getting a great bargain on its current outlook.
Shares dipped as investors shrugged their shoulders at Vishay’s latest earnings beat, but the stock has seemed to bottom out and could be sitting at a great buy point right now.
2. Cypress Semiconductor
Cypress Semiconductor is a leading provider of high-performance digital and mixed-signal integrated circuits. The company has also emerged as a leader in the Internet of Things industry after shelling out $550 million for Broadcom’s IoT business in 2016. Cypress’ “WICED” IoT platform is part of one of the largest such portfolios in the industry.
Cypress has been an up-and-down stock throughout 2018, but we are looking for shares to start reacting to the company’s improving earnings outlook soon. The firm has witnessed eight positive revisions to its full-year EPS estimates within the past 30 days, and that type of sentiment is normally met with share price momentum.
Other reasons to like Cypress include its Zacks Rank #1 (Strong Buy) and “A” grade for Growth in our Style Scores system. The company also pays out a healthy 2.8% dividend.
3. ON Semiconductor
ON Semiconductor has traditionally been known as a power management and commodity chip maker, but the company has started to carve out a budding IoT division. ON is now heavily involved with automotive solutions, and its IoT offerings also include products catered to wearables, smart city development, and industrial automation.
ON is currently a Zacks Rank #2 (Buy) and has emerged as an interesting earnings growth pick, with EPS totals expected to improve by 26% this year and over 13% on a long-term, annualized basis. Meanwhile, the stock is trading at just 11x forward 12-month earnings and sports a PEG ratio of just 0.8.
Bottom Line
The Internet of Things is one of the most exciting emerging tech markets in the world. And while these specific products are interesting, the real moneymakers in these situations are the companies that are building the tech that powers these products.
The best way for investors to cash in on this growing trend is to identify companies that are not only investing in the Internet of Things, but are also displaying solid fundamentals and impressive Zacks metrics.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Mellanox Technologies, Tencent Holdings, Vishay Intertechnology, Cypress Semiconductor and ON Semiconductor highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 21, 2018 – Zacks Equity Research highlights Mellanox Technologies as the Bull of the Day, Tencent Holdings (TCEHY - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Vishay Intertechnology, Inc. (VSH - Free Report) , Cypress Semiconductor and ON Semiconductor (ON - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
I last wrote about Mellanox Technologies as the Bull of the Day on July 17 before they reported their Q2 results, which included a 16% EPS beat, a 1.2% top line beat and raised guidance.
In short, this $4 billion provider of essential semiconductor-based, interconnect products to world-class server, storage, and data centers customers delivered the coveted "trifecta" in its quarterly performance.
Record quarterly revenue of $268.5 million was up 7% sequentially and 27% year-over-year. The company's ethernet revenue was up 81%, and ethernet switch revenue +114% annually.
Mellanox gave improved guidance for Q3 with revenue in a range of $270-$280 million, vs the consensus of $270 million. The company sees Q3 gross margins of 68.5%-69.5%.
Accordingly Mellanox raised this year's revenue projection to $1.065-$1.085 billion from $1.05-$1.07 billion. The company sees full-year gross margins at 68.5%-69.5%. Gross margins were lighter year over year with Q2 GM at 61.4% vs. 65.5% last year, so I think this guide for the full year helps a lot.
This paragraph in the press release from the CEO, Eyal Waldman, sums up the current state of business pretty well...
"We continue to see strong traction with our 25 gigabit per second and above solutions as they become the preferred solution of choice in hyperscale, cloud, high performance computing, artificial intelligence, storage, financial services and other markets across the globe. Our Ethernet revenue grew 81 percent year-over-year driven by network adapter and switch growth with hyperscale and OEM customers. We are proud to see our InfiniBand solutions accelerate the world's top three and four of the top five supercomputers, as seen in the recently published TOP500 supercomputers list. Our performance in the second quarter further shows the benefit of our investment in diversifying our revenue base and the operational focus that is driving our higher profitability."
Bear of the Day:
Tencent Holdings is the giant Chinese Internet portal which provides mobile, telecom, entertainment, social media and financial services, and monetizes most of these with online advertising.
The stock has slipped to a Zacks #5 Rank because analysts took EPS estimates down for this year and next as trouble in China's economy begins to surface.
So why did it fall to the cellar of the Zacks Rank?
Because analysts lowered 2018 EPS projections 7% from $1.38 to $1.28 in the last 60 days.
And 2019 estimates were cut 10% from $1.85 to $1.65.
Additional content:
3 “Internet of Things” Stocks to Buy Right Now
Semiconductor stocks have been the subject of volatility so far this year, but the underlying business of this industry is growing—and should continue that trend in 2018 and beyond. Throughout the chip-making space, companies have successfully adapted to the changing needs of the consumer, including an increased demand for small, high-powered chips that enable “Internet of Things” (IoT) devices.
For those that don’t know, the Internet of Things is the growing world of interconnected household and industrial devices. Everyday products and machines can now be embedded with sensor technology to process data or interact with other electronic devices.
For example, consumer-level IoT products include things like Amazon’s Echo “smart speaker,” wearable motion and activity tracking products, and advanced in-car technology. On the commercial side of the IoT market, industrial manufacturers have begun implementing sensors into machines to track performance and efficiency.
(Also Read: How to Invest in the "Internet of Things")
As demand for the microchips that power these IoT devices continues to grow, semiconductor manufacturers with a focus on IoT products will continue to benefit. And 2018 promises to be another marquee year for these suppliers, with the number of connected devices worldwide set to continue its rapid growth.
With that said, we’ve found three already-strong stocks that are looking to benefit even more from further IoT growth in 2018:
1. Vishay Intertechnology, Inc.
Vishay Intertechnology is a global manufacturer and supplier of discrete semiconductors. The company has a broad portfolio of unique passive and active solutions that are tailored to the “things” being controlled in the IoT. Vishay markets its portfolio to manufacturers of everything from biometric monitoring systems to fitbands and smart appliances.
VSH is currently a Zacks Rank #1 (Strong Buy). The stock is solid growth option, with earnings and revenue expected to improve by 40 and 16%, respectively, this year. But VSH is also reasonably priced, and the stock’s P/E of 11.3 and PEG of 1.2 show that investors are getting a great bargain on its current outlook.
Shares dipped as investors shrugged their shoulders at Vishay’s latest earnings beat, but the stock has seemed to bottom out and could be sitting at a great buy point right now.
2. Cypress Semiconductor
Cypress Semiconductor is a leading provider of high-performance digital and mixed-signal integrated circuits. The company has also emerged as a leader in the Internet of Things industry after shelling out $550 million for Broadcom’s IoT business in 2016. Cypress’ “WICED” IoT platform is part of one of the largest such portfolios in the industry.
Cypress has been an up-and-down stock throughout 2018, but we are looking for shares to start reacting to the company’s improving earnings outlook soon. The firm has witnessed eight positive revisions to its full-year EPS estimates within the past 30 days, and that type of sentiment is normally met with share price momentum.
Other reasons to like Cypress include its Zacks Rank #1 (Strong Buy) and “A” grade for Growth in our Style Scores system. The company also pays out a healthy 2.8% dividend.
3. ON Semiconductor
ON Semiconductor has traditionally been known as a power management and commodity chip maker, but the company has started to carve out a budding IoT division. ON is now heavily involved with automotive solutions, and its IoT offerings also include products catered to wearables, smart city development, and industrial automation.
ON is currently a Zacks Rank #2 (Buy) and has emerged as an interesting earnings growth pick, with EPS totals expected to improve by 26% this year and over 13% on a long-term, annualized basis. Meanwhile, the stock is trading at just 11x forward 12-month earnings and sports a PEG ratio of just 0.8.
Bottom Line
The Internet of Things is one of the most exciting emerging tech markets in the world. And while these specific products are interesting, the real moneymakers in these situations are the companies that are building the tech that powers these products.
The best way for investors to cash in on this growing trend is to identify companies that are not only investing in the Internet of Things, but are also displaying solid fundamentals and impressive Zacks metrics.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Get today’s Zacks #1 Stock of the Day with your free subscription to Profit from the Pros newsletter:
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.