Texas Instruments (TXN-Q)

Instead of ADI, he owns TXN, which does digital and analog chips. One of the most profitable of all of the chip manufacturers, and this is why he owns it.

TXN vs. ADI Likes ADI because of chips for driverless vehicles, and involved in 4G and 5G with telecoms. Aerospace and military applications. Fundamentals are better, dividend growth better. Over the next 5-10 years, better runway to grow, and with it earnings, profits, share price, and dividends.

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.