Top 5 stocks of the week and how to trade them

Published Fri, May 29 20152:38 PM EDT

CNBC Pro highlights the top performing stocks this week and analyzes whether the good times will continue. (The price change was calculated as of Friday morning so it is subject to change. If one stock led multiple indexes, we profiled the second best, too.) Best in the Dow: Intel (INTC), up 3 percent this week Source: FactSet Shares of the chipmaker moved higher on Friday, after reports that Intel may be close to acquiring Altera for about $15 billion. Since news of a potential deal came out in March, Intel shares are up 14 percent, while Altera, which makes programmable chips used in cellphone towers and other industrial applications, has seen its stock rally 41 percent. Despite the recent runup, JPM Securities' analyst Alex Gauna reiterated a sell rating on the stock, as Intel continues to struggle with weak trends in the PC market that will likely impact revenue. Here's what Gauna wrote in a recent note to clients: "Multiple well-placed IC [Integrated Circuit] industry sources have shared with us that they don't see how Intel could make the up sequential revenue target the Street is looking for, and that conditions are much weaker than when Intel issued guidance." Part of that weakness, according to the analyst, is steaming from higher-margin enterprise segments ceding share to data centers and cloud competitors, further diminishing demand for PCs and servers. On the report, he set his 12-month price target at $27 or 22 percent lower from where the stock was trading Friday. Best in the S & P 500: Avago Technologies (AVGO), up 10 percent this week (second best behind Broadcom, which is getting acquired by Avago) Source: FactSet In one of the largest technology acquisitions on record, semiconductor maker Avago Technologies agreed to buy Broadcom , a chipmaker, for $37 billion. Shares of Avago traded at an all-time high Friday, and are up 46 percent for the year. Following the news this week, analysts at Jefferies upgraded the stock to a buy from a hold, boosting their price target to $179, predicting a 22 percent gain from here. Here's what they had to say on the potential merger: "The proposed transaction would create the third largest semiconductor company in our coverage universe with $17 billion in annual revenues and $6 billion in annual net income, positioning it as a leading supplier in both Smartphones and Data Center infrastructure." Jefferies' analysts believe "AVGO investors win 2x as AVGO both lowers BRCM's costs and gets a higher multiple on the higher earnings," with the additional cash flow positioning the new company "as a capital return play." Best in the Nasdaq 100: Nvidia , up 6 percent this week (Third best behind Broadcom and Avago) Source: FactSet Shares of the graphics chipmaker rallied this week on the back of increased consolidation in the industry. One of the key catalysts for the stock, according to investors, is how the company's technology could be used in self-driving cars. In fact, Nvidia's management recently noted that it could add $5 billion to revenue. "The company has many developing growth markets including not only its traditional gaming business but also virtual/cloud GPU, HPC accelerators, and automotive," analysts at Stifel wrote in a recent note to clients. "We remain very positive on Nvidia's unique ability to develop these markets." Stifel rates ticker NVDA a buy with a target price of $27 or 22 percent higher from here. Best in the S & P MidCap 400: Akorn (AKRX), up 6 percent this week Source: FactSet Shares of the drugmaker moved higher this week, after a recent report by Jefferies named the company as a potential acquisition target. Consolidation in the pharma space, which is on pace to set a record this year, has led many investors to hunt for potential candidates. Read More Number of takeover offers highest since 2007 level Akorn's stock is well off its high in April, but remains positive on the year, with a gain of 29 percent. The consensus estimate on Wall Street has an overweight rating on the stock, with a target price of $57, implying a 22 percent gain from here, according to FactSet. Best in the Russell 2000: ITT Educational Services (ESI), up 73 percent this week Source: FactSet Shares of the for-profit educational institution rallied Friday, after it announced results of an audit of its 2014 financial statement. Based on the report, the company appeared to have met the Department of Education's financial requirements to stay in business without need for governmental oversight. Despite this week's gains, ESI is down 75 percent in the past year. Some traders attributed Friday's rally to a "short squeeze," pointing to the high bearish sentiment for the stock as half of the company's shares available to trade are sold short.

Nvidia CEO Jensen Huang speaks during a press conference.

David Paul Morris | Bloomberg | Getty Images

CNBC Pro highlights the top performing stocks this week and analyzes whether the good times will continue.

(The price change was calculated as of Friday morning so it is subject to change. If one stock led multiple indexes, we profiled the second best, too.)