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Profitability can be an elusive concept - even the most common profitability measures such as net income and return on assets can be manipulated by different measurement choices made by management.

One way to find highly profitable companies is to find companies beating their industry peers on gross, operating, and pretax margins (covering most if not all expenses on the income statement).

We ran a screen on semiconductor stocks of the tech sector for those with this high profitability measure, beating their industry averages of gross, operating, and pretax margins.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these stocks will continue out-earning their peers? Use this list as a starting point for your own analysis.

List sorted by difference between gross margin and industry average.

1. CEVA Inc. (NASDAQ:CEVA): Engages in designing and licensing silicon intellectual property for the handsets, portable multimedia, and consumer electronics markets. Market cap of $717.19M. TTM gross margin at 94.32% vs. industry gross margin at 60.37%. TTM operating margin at 30.36% vs. industry operating margin at 25.30%. TTM pretax margin at 34.81% vs. industry pretax margin at 24.51%. The stock is a short squeeze candidate, with a short float at 15.6% (equivalent to 16.31 days of average volume). The stock has gained 33.68% over the last year.

2. Linear Technology Corp. (NASDAQ:LLTC): Designs, manufactures, and markets a line of linear integrated circuits. Market cap of $6.89B. TTM gross margin at 81.16% vs. industry gross margin at 60.42%. TTM operating margin at 50.54% vs. industry operating margin at 25.48%. TTM pretax margin at 47.82% vs. industry pretax margin at 24.69%. The stock has lost 9.62% over the last year.

3. EZchip Semiconductor Ltd. (NASDAQ:EZCH): Engages in the development and marketing of Ethernet network processors for networking equipment. Market cap of $772.57M. TTM gross margin at 77.72% vs. industry gross margin at 60.37%. TTM operating margin at 33.61% vs. industry operating margin at 25.30%. TTM pretax margin at 35.83% vs. industry pretax margin at 24.51%. The stock is a short squeeze candidate, with a short float at 6.18% (equivalent to 5.17 days of average volume). The stock has lost 4.54% over the last year.

4. Hittite Microwave Corporation (NASDAQ:HITT): Designs and develops integrated circuits, modules, and subsystems for technically demanding radio-frequency, microwave, and millimeter-wave applications. Market cap of $1.61B. TTM gross margin at 76.19% vs. industry gross margin at 60.47%. TTM operating margin at 47.77% vs. industry operating margin at 25.39%. TTM pretax margin at 48.01% vs. industry pretax margin at 24.62%. The stock is a short squeeze candidate, with a short float at 6.75% (equivalent to 8.71 days of average volume). The stock has lost 15.42% over the last year.

5. Intel Corporation (NASDAQ:INTC): Engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide. Market cap of $129.34B. TTM gross margin at 74.58% vs. industry gross margin at 60.42%. TTM operating margin at 34.45% vs. industry operating margin at 25.48%. TTM pretax margin at 33.66% vs. industry pretax margin at 24.69%. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 3.31%, current ratio at 2.24, and quick ratio at 1.91. The stock has gained 25.62% over the last year.

6. Altera Corp. (NASDAQ:ALTR): Designs, manufactures, and markets programmable logic devices; structured application-specific integrated circuit devices; predefined design building blocks or intellectual-property cores; and associated development tools. Market cap of $12.02B. TTM gross margin at 72.06% vs. industry gross margin at 60.47%. TTM operating margin at 44.11% vs. industry operating margin at 25.39%. TTM pretax margin at 44.07% vs. industry pretax margin at 24.62%. The stock has gained 5.08% over the last year.

7. Analog Devices Inc. (NASDAQ:ADI): Engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits used in industrial, communication, computer, and consumer applications. Market cap of $10.77B. TTM gross margin at 70.32% vs. industry gross margin at 60.37%. TTM operating margin at 35.90% vs. industry operating margin at 25.30%. TTM pretax margin at 35.46% vs. industry pretax margin at 24.51%. The stock has lost 1.26% over the last year.

8. Maxim Integrated Products Inc. (NASDAQ:MXIM): Designs, develops, manufactures, and markets a range of linear and mixed-signal integrated circuits worldwide. Market cap of $7.63B. TTM gross margin at 69.63% vs. industry gross margin at 60.42%. TTM operating margin at 27.76% vs. industry operating margin at 25.48%. TTM pretax margin at 26.37% vs. industry pretax margin at 24.69%. The stock has gained 13.79% over the last year.

9. Xilinx Inc. (NASDAQ:XLNX): Designs, develops, and markets programmable platforms in North America, the Asia Pacific, Europe, and Japan. Market cap of $8.50B. TTM gross margin at 66.92% vs. industry gross margin at 60.42%. TTM operating margin at 31.03% vs. industry operating margin at 25.48%. TTM pretax margin at 29.06% vs. industry pretax margin at 24.69%. The stock has gained 11.69% over the last year.

10. Microchip Technology Inc. (NASDAQ:MCHP): Develops and manufactures semiconductor products for various embedded control applications worldwide. Market cap of $6.90B. TTM gross margin at 65.68% vs. industry gross margin at 60.42%. TTM operating margin at 31.25% vs. industry operating margin at 25.48%. TTM pretax margin at 29.98% vs. industry pretax margin at 24.69%. The stock is a short squeeze candidate, with a short float at 10.36% (equivalent to 8.62 days of average volume). The stock has gained 6.77% over the last year.

*Profitability data sourced from Fidelity, all other data sourced from Finviz.

Source: 10 Semiconductor Stocks With Impressive Profitability