Texas Instruments (TXN)

He would stratify the semiconductor market into 2 categories, digital and analog. In many cases, this company is the old analog style company, and in many cases, have a lot of chips that are very, very primitive in the economy, using them in lighting, baseboard heating, radios, TV, etc. Digital chips are used to power the Internet, and are obviously much more expensive chips. There has been increased penetration of semiconductor content in emerging markets, and it is going to be a continuing play moving forward. Any exposure to that category is good. Unfortunately, all technology stocks have run very hard in the last few years. He would like to see a bit of a roll over in the semiconductor market, which is when he would be looking to adding more money.

He would be a little cautious on this. Its valuation is in the low 20s, which is quite high on a PE ratio. There has been an ongoing commoditization of the chip market, so it tends to be very volatile. If you own, consider selling some of your holdings, if not all of it, and move on to something which has a little more stability.

(Market Call Minute.) The whole semiconductor sector in the US is doing well. This is one of the leading companies in that, so he suspects they will continue to do well.

(A Top Pick November 22/16. Up 28%.) Internet of things has been a theme. He is all about finding secular long-term themes that could go on for years, getting to the best companies, and staying in them as long as they work and the fundamentals are there.

(A Top Pick Sept 13/16. Up 25.29%.) For the last 2.5 years, probably the most powerful secular theme in the market has been in technology, specifically 3 big themes of 1) cloud-based computing, 2) software as a service and 3) Internet of things. In the Internet of things, we talk about all the devices that are being attached to the Internet, and this company sells analog chips that go into all these connected devices. This is one you can continue to Buy.

(A Top Pick July 19/16. Up 29.14%.) A major long-term theme he is focusing on is the Internet of things, connected devices. We are moving into a world where every machine is connected to the web, and this company creates a lot of the analog chips that get designed into products. Sold his holdings about a month ago. It broke out a couple of days ago, so would be a Buy at today’s price.

A very good company, and active in both the analog and digital side. It is struggling a little bit on margins on the analog side, and doing well on the digital side. What gives him pause is the multiple. It has done wonderfully, but is trading at about 22 or 23 times earnings, which is way out of his league. He doesn’t want to pay that on what is going to be a cyclical story.

After basing all summer long, this has broken out technically. They make integrated circuits that go into almost everything. The “internet of things” is where we are going to connect machines and appliances to each other through the Internet for control, measurement, etc. The company designs specific chips that get designed into a product, and then they are there for as long as the product is made. This gives them good, long lasting margins. It has about 15% of its revenue from the auto industry. Dividend yield of 2.69%. (Analysts’ price target is $74.27.)