3 Semiconductor Stocks With Encouraging Inventory Trends

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Includes: AVGO, ISSI, LSI-OLD
by: Kapitall

Do you consider company sales trends when evaluating stocks? Many companies rely primarily on sales as their main source of earnings, so checking the health of their revenues is an important step.

To illustrate this, we ran a screen on the semiconductors industry for stocks seeing positive trends in revenue relative to inventory year-over-year: higher growth in revenue than inventory year-over-year, as well as inventory decreasing as a portion of current assets over the same time period.

This indicates healthy increases in sales, as well as healthy trends in liquidity.

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

Do you think these companies are seeing strong sales trends? Use this list as a starting point for your own analysis.

1. Avago Technologies Limited (AVGO): Engages in the design, development, and supply of analog semiconductor devices worldwide. Market cap at $9.44B.Price at $38.22. The stock is currently trading 2.54% below its 52-week high. Revenue grew by 2.36% during the most recent quarter ($563M vs. $550M y/y). Inventory grew by -4.93% during the same time period ($193M vs. $203M y/y). Inventory, as a percentage of current assets, decreased from 22.31% to 14.07% during the most recent quarter (comparing 3 months ending 2012-01-29 to 3 months ending 2011-01-30).

2. Integrated Silicon Solution Inc. (ISSI): Designs and markets integrated circuits for digital consumer electronics, networking and telecommunications, mobile communications, automotive electronics, and industrial markets. Market cap at $310.15M.Price at $11.39. The stock is currently trading 0.74% below its 52-week high. Revenue grew by 0.09% during the most recent quarter ($66.16M vs. $66.1M y/y). Inventory grew by -8.81% during the same time period ($51.12M vs. $56.06M y/y). Inventory, as a percentage of current assets, decreased from 30.75% to 25.08% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

3. LSI Corporation (LSI-OLD): Designs, develops, and markets storage and networking semiconductors and storage systems worldwide. Market cap at $4.98B.Price at $8.80. The stock is currently trading 4.40% below its 52-week high. Revenue grew by 11.15% during the most recent quarter ($523.14M vs. $470.66M y/y). Inventory grew by -3.61% during the same time period ($180.03M vs. $186.77M y/y). Inventory, as a percentage of current assets, decreased from 14.78% to 12.65% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

Written by Alexander Crawford. Accounting data sourced from Google Finance.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.