Xilinx: Shares defining bullish 'flag'

Posted Jan 24th 2008 11:44AM by Larry Schutts
Filed under: Earnings Reports, Cisco Systems (CSCO), International Business Machines (IBM), Agilent Technologies (A), Technical Analysis, Stocks to Buy

Xilinx (NASDAQ: XLNX) develops and markets integrated circuits that users program themselves to perform specific functions. The firm also offers a broad range of design software helpful in customizing its chips. Clients are primarily original equipment manufacturers in the telecommunications, computer, aerospace, industrial control and networking markets. Agilent (NYSE: A), Cisco Systems (NASDAQ: CSCO) and IBM (NYSE: IBM) are among the firms using Xilinx devices.

The company had good news for investors last week, when it reported fiscal Q3 EPS of 35 cents and revenues of $474.8 million. Analysts had been looking for 32 cents and $463.6 million. Management attributed the solid numbers to strong sales of new products. The company also issued Q4 revenue guidance of about $470-$489 million ($480.64M consensus). XLNX shares popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the stock with nine "strong buys," three "buys" and thirteen "holds." Analysts see a 16% average annual growth rate, through the next five years. The XLNX P/E ratio (17.65), PEG ratio (1.09), Price to Book ratio (3.52), Price to Cash Flow ratio (14.03), EPS Growth rate (40.00%), Operating Margin (21.37%) and Net Profit Margin (20.19%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 93% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $18.87 and $30.50. A stop-loss of $18.25 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

Tags: flag, fundamental analysis, FundamentalAnalysis, momentum, technical analysis, TechnicalAnalysis, Xilinx, XLNX