The Top 7 Semiconductor Stocks in January

As January comes to a close, there are few investors more excited than anyone who owns shares of semiconductor stocks. The Philadelphia Semiconductor index -- a useful proxy for the industry -- is up a whopping 13.4% so far this month! The semiconductor industry has already recovered all of its losses from a brutal 2011. That's truly incredible.

With the industry's stunning outperformance in mind, let's take a look at the top-performing stocks across the semiconductor space to see what's driving their huge returns this month.

The 7 semiconductor stocks with the highest returns in January

Company Name % Price Change (12/30/2011-01/27/2012)
NXP Semiconductors (Nasdaq: NXPI  ) 41.6
Skyworks Solutions (Nasdaq: SWKS  ) 35.6
LSI 30.1
Freescale Semiconductor 29.7
Cirrus Logic (Nasdaq: CRUS  ) 27.6
Advanced Micro Devices (NYSE: AMD  ) 26.3
TriQuint Semiconductor (Nasdaq: TQNT  ) 24.2

Source: S&P Capital IQ. Includes only companies with a market cap greater than $500 million and listed on U.S. exchanges.

Only one word is needed to sum up why three companies made the list: Apple. Cirrus Logic, TriQuint, and Skyworks are all key iPhone 4S suppliers and saw their share prices soar as news leaked out throughout the month that suggested Apple would steal gobs of smartphone market share. Eventually, when Apple did report, the earnings were far more stellar than even the most starry-eyed analysts had predicted. Cirrus rode the Apple wave to preannounce earnings that were well ahead of guidance while Skyworks posted a slight earnings beat of its own but also offered strong forward guidance.

Other than the Apple trio, NXP Semiconductor makes the list despite a relatively uneventful January. The company is a huge play on near field communication, or NFC, and saw its share price thrashed last year when the technology didn't gain wider acceptance. Samsung, otherwise known as the only phone company not named Apple that's seeing huge smartphone sales growth, recently went with NXP on its flagship Galaxy Nexus phone. With the new year, hope springs eternal, and it looks like optimistic investors are once again taking a flyer on NFC plays.

Finally, we come to Advanced Micro Devices. The company faced a rough December as investors fretted about the supply-chain impact from severe floods in Thailand that threatened to crimp crucial PC components. However, AMD shook off the worries by posting adjusted earnings of $0.19 per share, well ahead of analyst estimates of $0.16. The company bragged about strong server growth brought on by its new Bulldozer chip line.

It's worth noting that the top performers this month are the worst semiconductor performers from 2011. When the market overreacts the way it did last summer, the most beaten-down stocks will surge back the strongest in the recovery, so this is a trend we see fairly often.

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Eric Bleeker owns shares of Cirrus Logic. The Motley Fool owns shares of Apple, Cirrus Logic, and TriQuint Semiconductor. Motley Fool newsletter services have recommended buying shares of NXP Semiconductors and Apple and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.


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