One part of the technology sector that has had a very rough go of it in 2015 is the semiconductors as personal computer sales have slowed to a crawl, and the issues in China have dampened the overall momentum of the industry. A new research report from Deutsche Bank has one word for investors, and it is selectivity.

The Deutsche Bank team noted the caution expressed at the company’s technology conference, and China was indicated by many as the primary driver of incremental headwinds, via both broad-based demand softness and channel inventory burn. They suggest that investors be very careful with stock selection, and look for value.

We focused on three top stocks that are rated Buy at the firm.

Intel

This top chip company has been in the doghouse on Wall Street all year, and the recent very positive earnings report certainly has helped to lift the pall hanging over the company. Intel Corp. (NASDAQ: INTC) is one of the companies regarded as having among the highest shareholders cash returns at approximately 8%, but it has lagged high-growth specialty chip stocks. The iconic chip giant had a stellar 2014 on the tailwind from continued PC sales, but this year has been a far different story. Despite the second-quarter earnings report, the stock is down a gigantic 18.2% year to date.

Intel purchased chip rival Altera for a massive $16.8 billion. Some on Wall Street view the deal pessimistically, citing its high cost, aggressive growth assumptions on the part of Intel, and the increase in debt. Others feel the addition will help Intel start to move away from PC dependence. Intel’s pending acquisition of the company would put it into the traditional fabless market of programmable logic devices, but ultimately by 2020 50% of Altera’s product line could be manufactured at Intel facilities.

ALSO READ: 4 Cheap Large-Cap Tech Stocks to Buy for Solid Gains

A new focus at Intel beyond the PC world is positive for the company going forward. Many analysts think that the company’s new chip, which is a collaboration with Micron Technology called the 3D XPoint, could be primarily In-Memory compute in servers and its launch should coincide with Intel’s Purley platform server launch in 2016. This is another huge positive step-out from PC dependence.

Intel investors are paid an outstanding 3.31% dividend. The Deutsche Bank target price for the stock is $37. The Thomson/First Call consensus target is $33.40. Shares closed Friday at $29.77.
Maxim Integrated Products

This company supplies some chips to Samsung for the Galaxy S6. Maxim Integrated Products Inc. (NASDAQ: MXIM) designs, develops, manufactures and markets various linear and mixed-signal integrated circuits worldwide. The company also provides a range of high-frequency process technologies and capabilities for use in custom designs. It primarily serves automotive, communications and data center, computing, consumer and industrial markets.

The stock jumped in May when chatter about a buyout from Avago started to hit the tape. The company ultimately bought Broadcom in a massive $37 billion deal that should cool that speculation at least for the near term. While the company’s current business seems steady, an earnings miss and revisions down could take a toll in the near term.

Maxim shareholders are paid a 3.58% dividend. The Deutsche Bank price target is $44. The consensus target is $36.35. Shares closed Friday at $33.52.

ALSO READ: 9 Analyst Stock Picks Under $10 With Huge Upside Calls

NXP Semiconductors

This is considered a top play for investors looking for a chip stock with Internet of Things exposure. NXP Semiconductors N.V.’s (NASDAQ: NXPI) merger with Freescale Semiconductor was widely applauded on Wall Street, and many analyst believe the merger can transform the company into a powerhouse. The merger made NXP the fourth largest semiconductor company in the industry. It is also important to note that the combined company would be the number one supplier in auto semiconductors, number one supplier in global microcontrollers and a dominant supplier in mobile payments.

The company unveiled this year the industry’s most complete USB Type-C solution, including authentication and power delivery capabilities to further deliver secure connections. The authentication capabilities can be used to validate a device and determine whether specific functionality of that device should be enabled. This will maximize battery life and could prevent safety hazards or equipment damage from low-quality materials or non-compliant products. For example, detecting counterfeit power supplies before they are used for rapid charging functions.

NXP is getting its chips into high-growth areas such as contactless mobile payments, the Internet of Things, mobile-phone charging, increased cellular data consumption and LED lighting. The two business segments that cover these products grew 39% and 29% year over year, very impressive numbers. With a diversified product base, the stock remains a solid buy, albeit a touch pricey compared to others.

The Deutsche Bank price target is $125, and the consensus target is $124.45. The stock closed Friday at $90.98.

ALSO READ: History Says Market Could Retest Lows: 4 Safe Stocks to Buy

While not as contrarian as energy or gold, the chip sector has had a tough go of it so far in 2015. For tech investors looking to take profits from other momentum technology areas and redeploy, this may be the perfect place to look to reset capital.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.