Intersil Corp: Analysts Expect Growth From iPod Component Supplier

Includes: AAPL, ISIL
by: Hilary Kramer
Guest blogger: Larry Schutts, vice president of and a contributing editor for Larry looks for stocks with technical and fundamental characteristics indicating gains in the next 30 days. However, price movements may be volatile. He includes a stop-loss price in each post. Consider selling a position should the stop-loss be violated.

Competition among makers of electronic devices is intense and that gives component suppliers known for reliability and reasonable prices a solid advantage. When it comes to analog chips, many of the big name OEMs look to an outfit in Milpitas, California.

Intersil Corporation (NASDAQ:ISIL) is engaged in the design and manufacture of analog integrated circuits. Its product families address power management and signal processing functions. The firm offers a portfolio of application specific standard products and general purpose proprietary products for high-end consumer, industrial, communications, and computing markets. The company sells its devices to original equipment manufacturers, original design manufacturers and contract manufacturers in the United States, Europe and Asia. The Intersil customer list includes Dell (NASDAQ:DELL) and IBM (NYSE:IBM).

Shareholders were pleased last week to learn that the company is also a supplier of semiconductor components for the new Apple (AAPL) iPod nano. The stock popped on that news and has since moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with six "strong buys," nine "buys," six "holds" and three "sells." Analysts expect a 23% growth rate, through the next year. The ISIL Price to Book ratio (1.86), Price to Free Cash Flow ratio (22.90), Operating Margin (20.15%) and Net Profit Margin (19.48%) compare favorably with industry, sector and S&P 500 averages.

Institutions own about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $22.42 and $35. A stop-loss of $28.60 looks good here. Note that the firm is expected to announce Q3 earnings and revenues in mid-October. Management issued upside guidance for those results, on September 4.