Breakout in Chip Stock Could Land Traders Double-Digit Profits

My son-in-law, Andrew, is a techie. An electrical engineer and electronic hobbyist, he can rattle off information about nearly every kind of semiconductor on the market. Sometimes it's more detail than I want to know -- how the chip works, what it controls and how it's best used.

Andrew knows I follow the market closely, and in a burst of enthusiasm he recently said I should look at ARM Holdings (NASDAQ: ARMH). Their chips, he commented, currently "rule the market."


The trader in me needed no further encouragement. I checked the chart and saw an extremely bullish, low-risk technical pattern. And when I analyzed the fundamentals, I found a strong outlook.
ARM Holdings has quickly become the market leader in processors for mobile devices, cutting into Intel's (NASDAQ: INTC) lead in computer and server markets. In fact, ARMH has found its way into over 95% of all mobile phones, and over a quarter of all electronic devices worldwide.

The chip is so popular because it performs well on very low power, making it ideal for battery-operated electronics, like smartphones and tablets.

In addition to being a leading chipmaker, ARM Holdings is the world's largest holder of intellectual property (IP) on semiconductors. ARMH designs and licenses its technology to tech companies, like Apple (NASDAQ: AAPL) or Microsoft (NASDAQ: MSFT). Each company pays a licensing and royalty fee for every ARMH chip used, adding up to big dollars for the company. (more)