On March 29th, 2015 I Know First published an article on Seeking Alpha examining why Xilinx was a great stock to invest in. Despite falling stock prices, the company had strong products and financial health as well as a strong bullish algorithmic signal. The decreasing trend of the stock, it was argued, should not deter investors, especially because the company had just increased its dividend for the 10th year in a row. Investors have seen an amazing 20.29% increase since this bullish forecast was published.

As we explained in the last post, Xilinx (XLNX) is the world´s largest fabless semiconductor company founded in Silicon Valley in 1984. It designs and develops programmable devices and associated technologies worldwide. It´s known for inventing the field programmable gate array and for being the first semiconductor company with fabless manufacturing model. Its main competitors include Altera and Lattice Semiconductor.

Despite showing an interesting performance during the last ten months, Xilinx shares had high tops and deep bottoms. First of all, the company rallied more than 10 % in May, after showing increasing in its sales, attained 65% of market share. It has achieved a significant milestone at 28nm with over than 1 billion of cumulative product revenue which started shipping in the calendar year 2012, realized over three-quarters faster than any previous node.

Months later, Xilinx shares got hit after lackluster earnings reports that showed demand for microchips was weakening, in part because of the economic slowdown in China. Semiconductor stocks have tended to follow the ups and downs of China´s economy. In addition, disappointing results that week in big technology companies also brought semiconductors back to reality. Xilinx shares lost more than 17% from its high-price in May. As if this was no enough, one month later Xilinx shares suffered a huge strike with the crash in China’s stock market. XLNX went down to 38.78 (lowest price of the year), another 3% of losses.

The following 3 months were amazing for the company. In September, Goldman Sachs upgraded from neutral to buy the XLNX shares, increasing its share volume and price. In October, the company announced new tools with high performance and quality and presented a positive fiscal second quarter financial results with an encouraging outlook. XLNX reported earnings better that expected by analysts estimates. Shares went up fastly to 49.22 and finished October in 47.75, an amazing gain of 18.5% during the month. In November, XLNX attained a new 52-week high of 50.72.

We believe that the company’s continued focus on margin expansion, cost reduction across its product portfolio and higher yield are the positives. We also believe that Xilinx’s product launches will boost revenues.

Additionally, we are encouraged by Xilinx’s endeavor to return shareholder value through regular share buybacks and dividend payouts. During the last reported quarter, the company repurchased $100 million shares and paid dividends of approximately $80 million, instilling confidence to investors.

Risks could come from the delay in China LTE deployments and higher spending on research and development, and selling, general and administrative segments could impact the company’s near-term results.

Correct forecast

Previously our Algorithm predicted the performance of Xilinx for the period of March 11^th, 2015 to the June 11 ^th 2015 and from the March 11 ^th 2015 to the March 11^th,2016. As we can see in both periods I Know First had positive predictions with strong bullish algorithmic signals and high predictability (above 0.4).

The stock went up 18.36% in the 3-months period, in line with the I Know First predictions and the 1-year period haven´t finished yet, but the company is showing gains about 20.29% until January 22 ^th, 2016.

(Click on image to enlarge)

(Click on image to enlarge)