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Why Texas Instrument Stock Outperformed Competitors

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Texas Instrument shifts focus

In this series, we’ve seen that Texas Instruments (TXN) is diversifying from its personal electronics segment. It’s moving from PCs (personal computers) and smartphones to high-growth markets of automotive, industrial, and communications.

While the transition hasn’t yielded much in the short term, the results are now visible. The company reported strong guidance on the back of increasing demand from automotive, even as smartphone sales continue to remain sluggish.

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TXN stock in the past 52 weeks

TXN stock has risen 7.6% in the past 52 weeks. It’s currently hovering above $58, which is at the higher end of its 52-week range of $43.49–$60.60. The stock has performed better than its peers, which have fallen in the past 52 weeks.

Skyworks Solutions (SWKS) and Qorvo (QRVO) have high exposure to Apple (AAPL). Like TXN, they’ve diversified into other markets. SWKS and QRVO stocks have fallen 36.6% and 39%, respectively, in the past 52 weeks. The stock for Qualcomm (QCOM), TXN’s competitor in the communication space, has fallen 22% in the past 52 weeks.

Factors that cause a major stock price movement

TXN stock rose almost 12% on October 22, 2015, a day after the company reported strong results on the back of record iPhone sales. However, no major movement was seen for SWKS or QRVO stock.

TXN stock fell 15.8% from the end of December 2015 to mid-January 2016 as Apple scaled back iPhone production. SWKS and QRVO stocks also fell during this period. All three stocks began an upward movement in February 2016 as demand from adjacent markets picked up and several new products went into production, including Samsung’s (SSNLF) Galaxy S7.

The next big upward movement is expected in September 2016 when Apple launches its flagship product, the iPhone 7. We already saw some reaction on May 23, 2016, when the stocks for Apple suppliers reacted positively to the rumor of record production of the iPhone 7. SWKS rose 4.1%, QRVO rose 1.4%, and TXN rose 0.9% in the first session of May 23.

You can gain exposure to all Apple semiconductor suppliers by investing in the VanEck Vectors Semiconductor ETF (SMH). It has 8.0% exposure to QCOM, 5.4% to TXN, 3.6% to SWKS, and 1.3% to QRVO.

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