Back to top

Here's Why You Should Buy Cypress Semiconductor Stock Now

Read MoreHide Full Article

A wise investment decision involves buying well-performing stocks at the right time while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.

Cypress Semiconductor Corporation (CY - Free Report) has performed extremely well so far this year and has the potential to carry on the momentum in the near term. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.

Why an Attractive Pick?

Share Price Appreciation: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse year to date. Cypress Semiconductor returned 17.7%, which compared favorably with the S&P 500’s gain of 10%.

Solid Rank & VGM Score: Cypress Semiconductor currently carries a Zacks Rank #2 (Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Northward Estimate Revisions: Two estimates for the current year moved north over the past 60 days versus no southward revisions, reflecting analysts’ confidence in the company. Over this period, the Zacks Consensus Estimate for the current year increased 14.1%.

Cypress Semiconductor Corporation Price, Consensus and EPS Surprise

Positive Earnings Surprise History: Cypress Semiconductor has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 15.9%.

Strong Growth Prospects: The company’s Zacks Consensus Estimate for 2017 earnings of 81 cents reflects year-over-year growth of 65.3%. Moreover, earnings are expected to register 41.4% growth in 2018. The stock has long-term expected earnings per share growth rate of 10%.

Growth Drivers: Cypress Semiconductor is a leading provider of high-performance digital and mixed-signal integrated circuits. Last year, the company shelled out $550 million to acquire Broadcom’s Wireless Internet of Things business and now its “WICED” Platform is one of the largest IoT portfolios in the industry.

The recent launch of its Quicksilver platform in collaboration with Arrow Electronics, Inc. (ARW - Free Report) is expected to aid growth. The adoption of 802.11ac and Bluetooth into emerging IoT platforms will bode well for the company’s growth in the latter half of the year.

Cypress’ USB-C product continues to witness rapid penetration. Its customer base has grown almost 50% year on year in the second quarter. Notably, automotive revenues grew 7% in the second quarter.

The launch of Audi R8 is also a positive for the company as it will equip the model with 802.11ac connectivity for content sharing, hotspot and rear-seat entertainment. Bosch, a German multinational engineering and electronics company, has selected Cypress flash memory and NOR flash memory for its ADAS platform.

Management noted that the third quarter will be a peak quarter for wireless connectivity due to the holiday season. The company targets annual revenue growth from the segment to be in the range of 35% to 40%, up from the previous target of 23% to 27%.

Other Stocks to Consider

Better-ranked stocks in the broader technology sector include Applied Materials, Inc. (AMAT - Free Report) , and Activision Blizzard, Inc. (ATVI - Free Report) , both sporting a Zacks Rank #1.

Long-term earnings growth rate for Applied Materials and Activision is currently projected to be 17.1% and 13.6% respectively.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

More from Zacks Analyst Blog

You May Like