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4 Superstar Semiconductor Stocks Set to Soar

By U.S. News & World Report

In the past 12 months, the information technology sector has been one of the highest-flying components of the U.S. market. The semiconductor industry has been part of this growth, with the Philadelphia Semiconductor Index up 8.6 percent in the first half of the year.

However, concerns about a slowdown in the Chinese economy and earnings warnings by a few companies in the space forced the shares of many semiconductor firms lower in June and early July.

Consolidation is also hitting the industry as companies look for ways to boost their growth. In late June, it was announced that Intel (symbol: INTC) would buy Altera (ALTR), a maker of field-programmable gate arrays, for $16.7 billion. In March, NXP Semiconductors (NXPI) announced that it was merging with Freescale Semiconductor (FSL) in a deal valued at more than $40 billion.

Other acquisitions and mergers are likely in the future as larger players look for ways to continue their earnings growth trajectories.

The screen. We used Recognia Strategy Builder to search for U.S.-traded semiconductor stocks with reasonable valuations and strong prospects for future growth. We began by setting a minimum market cap threshold of $10 billion to limit ourselves to the larger, more stable portion of the semiconductor market.

Next, we looked for stocks with strong prospects for growth based on their projected earnings per share growth rate. We selected only stocks with projected EPS growth this year of 10 percent or more. In addition, to zero in on companies with efficient operations, we selected only companies with return on equity of 10 percent or more. Return on equity is a measure of how efficiently a company’s management has employed capital to generate income.

Finally, to ensure we don’t overpay for our investments, we screened for companies with reasonable forward price-to-earnings ratios of 30 or less. Forward P/E ratio is a measure of the relative value of the stock price when compared to the analysts’ estimate of this coming year’s earnings. Here are the results:

Intel is the largest company on our list with a market cap of $140 billion. It has strong return on equity of 20.8 percent and a very reasonable forward P/E ratio of 12.7. Though Intel has been stung by the move from traditional PCs to tablets and mobile devices, it still has a very strong business and is expected to grow earnings by more than 12 percent this year.

NXP Semiconductors NV of the Netherlands has the highest return on equity on our list at 58.6 percent. As noted above, in March NXP announced a merger with Freescale Semiconductors of Austin, Texas. The combined entity will be among the largest semiconductor firms worldwide with combined annual revenue of more than $9 billion.

Micron Technology (MU) is a leading manufacturer of semiconductor memory including DRAM, flash memory and solid state drives. In the last month, the stock price has dropped by more than 25 percent after reporting disappointing earnings in late June. As a result, Micron is now valued extremely well with a forward P/E ratio of just 4.8. Such a low valuation is attractive to a potential acquirer — so it was no surprise that China-owned chip maker Tsinghua Unigroup made a $23 billion offer for Micron this week.

Linear Technology (LLTC) is the smallest company on our list with a market capitalization of just $10.2 billion. Linear manufactures a variety of analog integrated circuits for the telecommunications, networking and computing sectors. In mid-April, the company announced fiscal third-quarter results that were largely positive but the stock declined on negative earnings results by larger firms such as Texas Instruments (TXN). With strong growth prospects and a reasonable forward P/E ratio of 20.2, Linear is poised for stock price appreciation.

Historical Performance: Recognia Strategy Builder provides a backtesting capability to evaluate how well an investing strategy would have worked over a five-year historical period. Using a three-month buy-and-hold strategy, the screen described had a 16.5 percent annualized return compared to 11.7 percent for the Dow Jones industrial average and 14. percent for the Standard & Poor’s 500 index.

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Recognia Inc. in respect of the investment in financial instruments. Investors should conduct further research before investing.

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4 Superstar Semiconductor Stocks Set to Soar originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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