With several interesting trends like the Internet of Things and artificial intelligence on the rise, it is an exciting time to be investing in the technology sector. What’s more, it is also a profitable time to be a tech-focused investor, as this space has been among the strongest performing sectors all year.
And while the behemoths like Microsoft MSFT and Apple AAPL may hog all the headlines, it’s really been the companies powering their technologies—the semiconductor manufacturers—that have had a strong year on the markets.
Indeed, as our Computer and Technology sector has gained nearly 22.5% year-to-date, semiconductor companies have been a driving factor behind its growth. The aforementioned emerging tech trends have created new consumer demand, and the semiconductor makers are delivering.
Luckily, the proven Zacks stock picking methods are effective across all industries. Check out these Zacks Rank #1 (Strong Buy) semiconductor stocks right now:
1. Micron Technology (MU)
Micron is one of the leading worldwide providers of semiconductor memory solutions. The company’s memory solutions are marketed towards customers in a variety of industries, including computer manufacturing, consumer electronics, and telecommunications.
Shares of Micron are up over 80% year-to-date, and the stock is one of Wall Street’s most talked about. This is owed directly to the company’s incredible growth rates on the top and bottom lines. In fact, our current consensus estimates are calling for quadruple-digit EPS growth and 60% sales growth this quarter. MU is also sporting an “A” grade for Value, which is underscored by its impressive P/E ratio of just 5.46 and its P/S ratio of 2.16.
2. Nvidia Corporation (NVDA)
If you’ve been paying attention to this space at all lately, you probably already know that Nvidia has emerged as one of Wall Street’s most exciting growth prospects over the past year. Shares of this remarkable graphics chip manufacturer have soared more than 69% in 2017 alone, and so long as the tech sector stays hot, Nvidia is showing very few signs of slowing down.
For one, the Zacks Consensus Estimate is currently calling for EPS growth of 40% this fiscal year. Nvidia has also surpassed our consensus estimate by an average of 35% in each of the trailing four quarters, so it would hardly be a surprise if the company outperformed again, surpassing this expected growth rate in the process. Nvidia’s estimate revision activity has also been incredibly strong recently, and overall, the company is benefitting from new demand in emerging markets like cryptocurrency mining, self-driving cars, and AI.
3. Applied Materials (AMAT)
Applied Materials is a leading supplier of fabrication equipment to semiconductor manufacturers. The company has been the number one equipment supplier to the global semiconductor for over twenty years and has benefitted greatly from increased demand from its clients recently.
AMAT is an exciting growth pick, with earnings expected to swell by 84% and sales projected to climb by 34% this fiscal year. Applied is also witnessing cash flow growth of 28% right now, which outpaces its industry average. Furthermore, the company’s RoE of 41% proves that it deliver great value on its shareholder equity. On top of all of this, Applied’s estimate revision picture looks strong, and the company is a consistent earnings over-performer.
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