Microcontroller and touch specialist Atmel (NASDAQ:ATML) had a bumpy 2013, but rode a solid wave of enthusiasm into the recent Consumer Electronics Show that has the stock up more than 10% year-to-date. I see some solid reasons to be optimistic about the company's efforts in touch, as well as its underappreciated MCU business. The pace and magnitude of gross margin improvements are significant unknowns, though, and there is ample competition in the touch space.
Atmel is not the cheapest chip stock out there, but progress with touch control and sensor attach rates will likely be well-rewarded by the market. Double-digit free cash flow growth can support a fair value in the $9.50 to $10 range, and although I...
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