3 Semiconductor Stocks With Encouraging Receivables And Inventory Trends

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 |  Includes: HIMX, ISSI, LSI-OLD
by: Kapitall

Are you interested in the growth prospects that the tech sector can offer? If so, here are some ideas on how to dig deeper into the industry.

We ran a screen on the semiconductor industry for stocks with strong sales trends relative to both accounts receivable and to inventory.

Since accounts receivable is the portion of revenue not yet received, and there is no guarantee the money will ever be received in full, the smaller receivables is the better. That is, companies with lower accounts receivable relative to revenue are thought to have higher quality revenues.

We first screened for companies seeing faster growth in revenue than accounts receivable year-over-year.

As for inventory, since inventory represents goods not yet sold, we also screened for companies seeing faster growth in revenue than inventory year-over-year, which also indicates growing sales trends.

To test for strong liquidity, we also screened for companies seeing accounts receivable and inventory that comprise a smaller portion of current assets over this time period.

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 have strong sales trends? Use this list as a starting point for your own analysis.

1. Himax Technologies, Inc. (NASDAQ:HIMX): Designs, develops and markets semiconductors for flat panel displays. Market cap at $408.69M. Price at $2.24. Revenue grew by 19.84% during the most recent quarter ($169.23M vs. $141.21M y/y). Accounts receivable grew by 2.8% during the same time period ($181.11M vs. $176.18M y/y). Receivables, as a percentage of current assets, decreased from 36.26% to 35.12% during the most recent quarter (comparing three months ending 2011-12-31 to three months ending 2010-12-31). Inventory grew by -4.25% during the same time period ($112.98M vs. $117.99M y/y). Inventory, as a percentage of current assets, decreased from 24.28% to 21.91% during the most recent quarter (comparing three months ending 2011-12-31 to three months ending 2010-12-31).

2. LSI Corporation (NASDAQ:LSI-OLD): Designs, develops and markets storage and networking semiconductors and storage systems worldwide. Market cap at $4.70B. Price at $8.09. Revenue grew by 11.15% during the most recent quarter ($523.14M vs. $470.66M y/y). Accounts receivable grew by -24.51% during the same time period ($246.54M vs. $326.6M y/y). Receivables, as a percentage of current assets, decreased from 25.84% to 17.33% during the most recent quarter (comparing three months ending 2011-12-31 to three months ending 2010-12-31). 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 three months ending 2011-12-31 to three months ending 2010-12-31).

3. Integrated Silicon Solution Inc. (NASDAQ:ISSI): Designs and markets integrated circuits for digital consumer electronics, networking and telecommunications, mobile communications, automotive electronics and industrial markets. Market cap at $296.36M. Price at $10.70. Revenue grew by 0.09% during the most recent quarter ($66.16M vs. $66.1M y/y). Accounts receivable grew by -5.93% during the same time period ($35.36M vs. $37.59M y/y). Receivables, as a percentage of current assets, decreased from 20.62% to 17.35% during the most recent quarter (comparing three months ending 2011-12-31 to three months ending 2010-12-31). 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 three months ending 2011-12-31 to three months ending 2010-12-31).

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

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