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Past Performance: NXP Semiconductors (NXPI) could be poised for a breakout quarter, especially if the rumors about the new Apple (AAPL) iPhone are true. NXP hasn't missed Wall Street EPS expectations since the third quarter of 2011. NXPI beat EPS expectations in the first quarter of both 2011 and 2012.

Fundamentals: NXP Semiconductor has fairly strong fundamentals across the board. The one weak fundamental is the P/S ratio of 1.81. Otherwise, NXPI has a current P/E of 18.6, a forward P/E of 8.90, and a PEG of 0.49. When compared to the S&P average P/E of 20.4, and a Forward P/E of 17.7. The technology sector as a whole has a P/E of 20.8, and a Forward P/E of 26.5. Using those metrics, NXP Semiconductors looks extremely affordable if not undervalued.

The Story: NXPI has just announced that some of their principal stockholders are selling twenty-five million shares via a secondary offering on March 13, 2013. NXPI will not receive any of the proceeds from this secondary offering, as the proceeds will be going to the shareholders taking part in the sale. Typically, principal shareholders selling large stakes in the company can be a harbinger of a dark future. In this case, it may just be the opposite.

NXPI is a leader in the NFC technology space. NFC technology allows people to use mobile platforms (phones and tablets) for a multitude of services from paying for your restaurant bill, to checking out a book from your local library, to your state ID. If NFC technology reaches it's full potential, the wallet in your pocket would be rendered useless.

NXPI has major competition from both Qualcomm (QCOM) and Broadcom (BRCM). Qualcomm has a P/E of 17.70, a Forward P/E 13.79, a P/S ratio of 5.60, and a PEG ratio of 1.01, while Broadcom has a P/E of 27.82, a Forward P/E of 11.29, a P/S of 2.46, and a PEG of 0.81. Comparing NXP Semiconductor to their two biggest competitors shows that NXPI has the strongest fundamentals. All three have strong patents in the NFC technology space, but NXP Semiconductor seems to have the strongest patent portfolio.

NXPI has a client list that consists of Apple, Google (GOOG), Samsung (OTC:SSNLF), and Microsoft (MSFT) just to name a few. Recent rumors are swirling around the latest iPhone coming from Apple saying that it will have fingerprint security technology and NFC technology. If NXP Semiconductors is able to acquire even just a piece of that business, it could have a major impact on their bottom line.

Summation and How To Play It: NXPI could potentially blow past EPS expectations when they report in April if they are able to get a piece of the new iPhone. Personally, I would look at NXP Semiconductors and see if they fit in to your portfolio and risk tolerance. 52-week price target: $38.10.

Source: Your Earnings Season Preview: NXP Semiconductors

Additional disclosure: Always consult with a registered financial professional before adding a new position to your portfolio. Investing involves a significant risk of loss, as such never invest more than you can afford to lose.