Texas Instruments Stock Price Forecast: TXN Is An Under-The-Radar Profitable Company You Should Own

motek 1The Texas Instruments stock price forecast article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary

  • If you like the semiconductor industry, you should consider adding Texas Instruments to your long-term investing portfolios.
  • Very few analysts and financial bloggers cover Texas Instruments. Its actually a consistently profitable company with decades of experience in embedded and analog semiconductor products/components.
  • Texas Instruments has a good future. Its products and services cover different industries. This company has managed to grow its dividend payments over the last 14 years.
  • TXN’s annual sales is not growing that much. However, it has always been profitable for the last 10 years. TXN also likes doing share buybacks.
  • My 1-year price target for TXN is $140. The new normal of work-from-home and learn-from-home accelerates the demand for electronics products.

The herd mentality that compels many to invest only in popular technology stocks is bad for the overall industry. Good companies like Texas Instruments (TXN) do not receive too much coverage or attention. TXN is an under-the-radar gold-level stock if you like the $621 billion/year global semiconductor industry. Learned investors sick of the super high valuation ratios of Advanced Micro Devices (AMD) can take profits and use the money to invest in good old Texas Instruments.

TXN is a 1950s-era company that is still making consistent profits from the global semiconductor industry. TXN is a buy because the global semiconductor industry is still growing fast. It will be worth $831.5 billion by 2024.

Texas Instruments Stock Price Forecast-industry
(Source: Statista)

The AI-powered Quant Rating System of Seeking Alpha has a Neutral view on TXN. I insist TXN is a buy right now. This stock is still trading below its 52-week high of $135.70. The pandemic is forcing many businesses to adopt work-from-home operations. This will compel them to buy more computers, tablets, laptops, and smartphones for their employees. Anything that compels customers to purchase more electronic products is good for TXN.

TXN Is King Of Integrated Circuits Products

Yes, Texas Instruments is an old cowboy – but it still offers products and services that remain relevant to many semiconductor/electronics manufacturers and consumers. Texas Instruments’ core business is designing and manufacturing analog and embedded semiconductor products. TXN is a buy because it continues to rule the $55.2 billion/year global analog Integrated Circuits business.

(Source: IC Insights)

Texas Instruments has other patented products and services that helps semiconductor fabricators improve their production processes. This company is has a large moat because of its diversified revenue streams. If not for my investigation, I would not have known that TXN is involved in ADAS (Advanced Driver Assistance Systems), building automation, data centers, and enterprise computing.

(Source: Texas Instruments)
(Source: Texas Instruments)

The screenshots above clearly illustrates that Texas Instruments has products and services that caters to various customers. TXN’s packaging tools/solutions alone already makes it a long-term winner. More importantly, Texas Instruments has been investing heavily on 5G. TXN is a buy because it can benefit from the coming 5G revolution. The software/hardware/services of 5G is projected to contribute $700 billion to the global economy by 2030.

A company that doesn’t depend on a single customer base or industry is always a good long-term investment.   

Bet On The Proven Profitability of Texas Instruments

Unlike the pathetic net income history of AMD, TXN is a consistent profit-generating company. Texas Instruments is a hardware company that touts a high 35.23% net income margin. TXN’s 5-year average net income margin is 28.71%. This high profitability is compelling reason to go long on TXN. Texas Instruments is not sacrificing its profit margins just to increase its annual sales.

Texas Instruments Stock Price Forecast-profitability
(Source: Seeking Alpha Premium)

Texas Instruments also boasts a very strong TTM Cash From Operations of $6.39 billion. The TTM levered free cash flow of TXN is $4.15 billion. This company’s Current Liabilities is only $2.38 billion. TXN’s quarterly Interest Expense on Debt is only $45 million.

Texas Instruments Stock Price Forecast – Conclusion

I have a bullish outlook for Texas Instruments stock price forecast because of its high profitability. You should go long on Texas Instruments because its high margins means it can consistently increase its dividend payments. As per Seeking Alpha, TXN has consistently increased its dividend payments over the last 14 years. Texas Instruments is very profitable that it can afford to do a 5-year annual dividend growth rate of 20.95%.

dividends
(Source: Seeking Alpha Premium)

Texas Instruments was founded in 1951. Seven decades of business operations has made it very sturdy and clever. The 10-year chart below shows TXN price ascent as its profits also soared higher. TXN is a buy because it grew its net income even though its annual revenue over the last decade did not change much.

Texas Instruments Stock Price Forecast-price and earnings

High profitability will also prod management of TXN to keep doing share buybacks. You should go long now on TXN because this company has a long history of share buybacks. From 2004 to date, Texas Instruments’ penchant for share buybacks has reduced the outstanding B shares by 46%. Share repurchases by management ultimately boosts the stock price.

(Source: Texas Instruments)

You should also go long on TXN because it has a very bullish one-year market trend score from I Know First. A stock only needs to score 100 to get a clear buy endorsement from the predictive AI of I Know First. TXN’s score is 260.41.

Past I Know First Texas Instruments Stock Price Forecast Success

I Know First gave bullish Texas Instrument stock price forecast in the past. On March 22 2020, the I Know First algorithm issued bullish 3-month TXN stock forecast, the algorithm successfully forecasted the movement of the TXN stock.  After 3 months, TXN shares rose by 28.31% in line with the I Know First algorithm’s forecast. See chart below.

Texas Instruments Stock Price Forecast-past forecast
past result

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