How NXP Semiconductors Zoomed 75% Higher In 2013
Shares of Dutch microchip designer NXP Semiconductors have zoomed 75% higher in 2013, leaving the S&P 500's (not-so) meager 30% returns in the dust. What's the story behind NXP's market-crushing performance?
Let's make one thing perfectly clear up front: NXP's 2013 surge is not a bounce back from a disastrous 2012. The stock has nearly tripled since the start of that year.
NXP's surge might come as a surprise if you only think of it as a maker of Near Field Communications, or NFC, chips. That technology was supposed to invade smartphones in a big way and then kind of replace credit cards for everyday payment transactions, among other things. But when was the last time you bought a hamburger with your NFC-enabled phone? Exactly. So there's clearly something else to NXP's business.
NXP makes a range of industry-standard commodity chips, as well as very specialized high-performance mixed signal, or HPMS, processors. The so-called standard products division accounts for just 18% of NXP's annual sales and is shrinking slowly. But the HPMS segment is what sets NXP apart from the competition, and it is growing at an annual clip of 28%. Yes, NFC chips are included in the HPMS division.
Thanks to strong sales in the automotive and security markets, NXP beat earnings targets in all four of its quarterly reports this year. These chips power features like computerized car locks and entertainment systems, drive-by-wire throttle controls, and secure digital ID cards. NXP claims to be the market leader in keyless entry systems, silicon-based radio tuners, and many more submarkets.
So the NFC market hasn't soared like NXP investors hoped, but who needs mobile payment revolutions when in-car entertainment systems can drive the business?
6 more picks for ultimate growth
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. In this company, even NXP's market-beating returns look soft. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen 6 picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.
The article How NXP Semiconductors Zoomed 75% Higher In 2013 originally appeared on Fool.com.Fool contributor Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends NXP Semiconductors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.