Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

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Thematic (Sector/Industry)

In our August 2015 Technology Observer, "Driving Through the Fog Around Analog," we highlighted several key themes that investors should consider when thinking about the analog chip space, including the presence of economic moats and growth opportunities in the automotive sector. A year later, we believe that the conclusions of our Observer are intact. We remain fond of growth opportunities in the car, thanks to rising content per vehicle. We think the firms we cover can increase their auto chip revenue at an 8% average annual pace, ahead of the chip industry as a whole as well as industry analyst expectations for the overall auto semiconductor market. M&amp;A remains a hot topic in the analog industry, and <a href="https://www.smartkarma.com/entities/18619" target="_blank" data-smartkarma-citation="entities:18619:1">Maxim Integrated Products (MXIM US)</a> still appears to be the most likely target in our coverage.Nonetheless, we fear that valuations are stretched after a 41% run in share prices across our list since our Observer was published, while sluggishness in other end markets is partially offsetting revenue growth in autos. While the analog leaders in our coverage universe are well managed and offer attractive capital-allocation policies in the form of rising dividends and buybacks, we think some investors, perhaps in search of yield, are being lulled into a false sense of security, believing that the industry is no longer cyclical. We think cycles still exist, though the analog cycle is more related to GDP than the supply-chain inefficiencies in PCs and cell phones that drove cycles in years past. We're still enthusiastic buyers of these high-quality names when adequate margins of safety arise, but we would stress patience at current valuations. We're least excited about no-moat <a href="https://www.smartkarma.com/entities/21227" target="_blank" data-smartkarma-citation="entities:21227:1">STMicroelectronics NV (STM IM)</a> 's valuation today.Analyst: Brian Colello &amp; Hari Narayan

In our August 2015 Technology Observer, "Driving Through the Fog Around Analog," we highlighted several key themes that investors should consider when thinking about the analog chip space, including the presence of economic moats and growth opportunities in the automotive sector. A year later, we believe that the conclusions of our Observer are intact. We remain fond of growth opportunities in the car, thanks to rising content per vehicle. We think the firms we cover can increase their auto chip revenue at an 8% average annual pace, ahead of the chip industry as a whole as well as industry analyst expectations for the overall auto semiconductor market. M&amp;A remains a hot topic in the analog industry, and Maxim Integrated Products (MXIM US) still appears to be the most likely target in our coverage.Nonetheless, we fear that valuations are stretched after a 41% run in share prices across our list since our Observer was published, while sluggishness in other end markets is partially offsetting revenue growth in autos. While the analog leaders in our coverage universe are well managed and offer attractive capital-allocation policies in the form of rising dividends and buybacks, we think some investors, perhaps in search of yield, are being lulled into a false sense of security, believing that the industry is no longer cyclical. We think cycles still exist, though the analog cycle is more related to GDP than the supply-chain inefficiencies in PCs and cell phones that drove cycles in years past. We're still enthusiastic buyers of these high-quality names when adequate margins of safety arise, but we would stress patience at current valuations. We're least excited about no-moat STMicroelectronics NV (STM IM) 's valuation today.Analyst: Brian Colello &amp; Hari Narayan

Taiwan Semiconductor (TSMC) - ADR (TSM US)

Telefonaktiebolaget Lm Ericsso (ERICB SS)

Samsung Electronics Pref Shares (005935 KS)

Analog Chip Demand Still Cruising Along in Autos, but Valuations Are in Overdrive