Its peers say you should buy
The semiconductor industry is certainly among the most boom-and-bust out there, with economic factors and chip pricing contributing to some wild margin swings. Shareholders in Fairchild Semiconductor Intl Inc (NYSE:FCS), a developer of power and non-power chips for the industrial and technology sectors, know this all too well.
Fairchild Semiconductor Intl Inc (NYSE:FCS)’s second-quarter results, announced in July, delivered a profit that was shy of the Street’s estimates and pointed to a third-quarter revenue outlook that was also short of the consensus. Fairchild Semiconductor Intl Inc (NYSE:FCS) blamed weak PC sales amid the rise of smartphones and tablets for much of its woes.
However, two years ago Fairchild Semiconductor Intl Inc (NYSE:FCS) announced that it would be laying off 120 of its workers, about 15% of its workforce, in 2011 in an effort to cut expenses, improve efficiency, and better compete overseas. Fairchild is now two years removed from that announcement, and I believe we could be on the cusp of seeing benefits from its restructuring. General and administration expenses dropped modestly, which allowed the company to spend more where it needs to, on R&D. That extra research is beginning to pay off, with industrial appliance chip revenue up 15% this past quarter.
Keep in mind that Fairchild Semiconductor Intl Inc (NYSE:FCS) isn’t the only company seeing big strength in industrial appliances. Texas Instruments announced nearly a year ago that it planned to drop out of making smartphone processors in its entirety and instead focus on appliance chips. With far less competition and better margins prone to smaller price swings, Texas Instruments opened investors’ eyes to the industrial chip opportunity. With peers Infineon, STMicroelectronics, and Texas Instruments all boosting their forecast in the latest quarter, I feel now might be the time to consider buying into Fairchild Semiconductor Intl Inc (NYSE:FCS) rather than giving up and heading for the hills.
Foolish roundup
Sometimes great investments can appear right under your nose if you’re willing to look past the one-time cost associated with an acquisition or a restructuring. All three stocks are valued attractively relative to their long-term growth rate, and I’d suggest digging deeper into each one.
The article 3 Stocks Near 52-Week Lows Worth Buying originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned.
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