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One of the world's oldest semiconductor firms is now in its 50th year of operation. Is it headquartered in the Silicon Valley? No. To find this outfit, you have to go to South Portland, Maine.
Fairchild Semiconductor (NYSE: FCS) offers a broad portfolio of components for electronic applications in the computing, communications, consumer, industrial and automotive markets. Products include power and signal components,logic chips, optoelectronics, non-volatile memory chips and diverse categories of analog and mixed-signal chips. The company also provides contract manufacturing services to other semiconductor makers. Competitors include Texas Instruments (NYSE: TXN) and Intel (NASDAQ: INTC).
The stock has gained ground over the past week, on upside for the semiconductor group and Robert W. Baird's upgrade of the issue to "outperform" (target $26). Baird noted improving analog and discrete trends, strong bookings for Q3, and rebounding notebook and mobile phone demand.
FCS shares popped on the news and have now begun to define a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Altogether, brokers recommend the issue with two "strong buys", five "buys" and seven "holds". Analysts expect a 57% growth rate, through the next year. The FCS Price to Sales ratio (1.48), Price to Book ratio (2.11), Price to Cash Flow ratio (13.28) and Price to Free Cash Flow ratio (24.28) compare favorably with industry, sector and S&P 500 averages.
The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $14.93 and $20.09. A stop-loss of $17.50 looks good here. Note that the firm is next expected to release quarterly results in mid-July.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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