Why CEVA Is My Favorite Semiconductor IP Stock For 2014

By SemiWiki

December 11, 2013

As a full time financial writer/investor, I am always on the lookout for compelling risk/reward opportunities, particularly in small-cap tech. While the world of large-cap tech is generally well understood by the investment/analyst community, smaller cap names are usually under-followed and often misunderstood. One such example of this – and one of my highest conviction stock picks for 2014 – is CEVA Inc., a leading vendor of DSP IP blocks that primarily go into cellular baseband chips (although the company is expanding outside of this core business).

A Little History
Following CEVA’s most recent earnings report (at which the company disappointed investors by missing top and bottom line expectations), the shares crumbled – dropping from just north of $18 per share to a low of $13.71. It is then that I took a position in the stock. But why did I do so?

Well, in order to understand why I believe CEVA’s future is so bright, it’s important to understand the difficulties that the company has had over the last few years. Really, the company’s (biggest) problems can be summed up with just one word: Qualcomm.

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