Buy Atmel, Sell Nvidia
As great as the sector has performed, one name that continues to get lost in the shuffle is Atmel(ATML) . It seems the company has approached the ranks of the unloved because it is not as flashy as the other names mentioned. But this is where investors are likely confusing market sentiment with value -- two entirely separate concepts.
While Atmel does indeed lack the flamboyance of Intel and Qualcomm, it does present many other advantages not shared by its peers -- many of which the market continues to unfairly discount. But as the underlying premise of investing remains finding value, investors must seek opportunities not immediately apparent. Often this includes sacrificing flair.
Although it's products are not used inside Apple(AAPL) devices like ARM and the even smaller TriQuint(TQNT) , the company competes and has a sizeable advantage over its rivals in the non-mobile device market -- items which include microcontrollers, programmable logic devices and a wide range of proprietary system-on-chips and non-volatile memory chips. The company is also gaining significant market share in several other products, particularly in the gadget market with its line of maXTouch controllers.
Its line of maXTouch products are what run the touch-screen interfaces on several devices from Nokia(NOK) as well as Google's(GOOG) Android devices. So it remains a surprise to see Atmel being overlooked in favor of a relative disappointment like Nvidia.
Management for Nvidia has not been able to fully address how it plans to secure more market share in the tablet and smart phone market -- even with its Apple advantage over Atmel. Does it currently deserve valuation multiple that is higher than Atmel? It is hard to justify.