Barclays' Muse said stocks, such as Qualcomm , Broadcom and Teradyne, are poised for further upside as smartphone sales will continue to grow in 2012. In addition, he favors Micron , based on price recovery in DRAM chips (dynamic random access memory) in the second quarter.
Meanwhile, Muse noted that the analog sector is "nearing the end of its course."
“Valuations there look peaky relative to the rest of the group. Unless there’s a meaningful recovery in the second half of 2012, many of these stocks are now primed, within the semiconductor world, to underperform," he said.
Additionally, strategists also expect to see increased sales of PCs and tablets, while smartphones will continue to be in high demand thanks to low-end 3G smartphones in emerging markets and continued replacement cycle of existing phones by smartphones around the world.
“While things are somewhat off in the first quarter…you’re getting to the point where you should see a rebound in chip orders,” said Andy Ng, analyst at MorningStar. “[Earnings] outlooks have been mixed, but a lot of these stocks have been going up because business conditions are expected to gradually improve.”
Morningstar has four-star ratings on names such as Texas Instruments , Analog Devices , Skyworks , ATMI and Marvell . In addition, the firm has a five-star rating on Applied Materials .Page 3 of 4 | Prev Page | Next Page