3 Superstar Stocks Leading the Silicon Carbide Revolution
Silicon carbide stocks have emerged as a driving force behind the silicon carbide (SiC) revolution. As demand for high performance semiconductors accelerates, these superstar stocks have positioned themselves for decades of growth.
Silicon carbide, known for its exceptional reliability, power density and high thermal conductivity, is becoming increasingly important in the energy storage, electronics and electric vehicle (EV) markets. The global silicon carbide market should reach more than $8 billion by 2030, growing at a CAGR of 11.7% (Grand View Research, 2022). Investors that are seeking exposure to this cutting-edge technology should look no further than these three transformative companies.
Now, let’s discover the three silicon carbide stocks to buy for 2024!
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Microchip Technology (MCHP)
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Microchip Technology (NASDAQ:MCHP) is an under-the-radar semiconductor stock that not too many investors know about presently. They are currently at the forefront of the silicon carbide semiconductor chip boom, making them one of the top prospects to consider in 2024.
Microchip Technology holds a robust portfolio of silicon carbide (SiC) MOSFETs, gate drivers and diode modules. Their mSiC product portfolio holds a variety of applications for the energy storage, power distribution, DC fast-charging for EVs, and DC-DC conversion for data centers. Over the last two years, Microchip has seen an explosion in revenue and EPS, with its dividend growing substantially.
In their latest quarterly results, Microchip’s revenue grew 9% YOY to $2.25 billion. Earnings per share grew 24% YOY to a record $1.21 per share, with operating income of $885 million representing 39.3% of net sales. Despite ongoing supply chain constraints and macroeconomic headwinds, product innovation has supported their long term growth strategy. Additionally, the company raised their quarterly dividend by 33.8% to a record $0.439 per share. This makes Microchip one of the best silicon carbide stocks to buy for 2024.
ON Semiconductor Corp (ON)
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ON Semiconductor Corp (NASDAQ:ON) is arguably the biggest sleeper semiconductor stock to watch for 2024. The company’s revenue and EPS have accelerated in recent years, thanks to the tailwinds of the SiC market.
When you look at ON Semi, consider it a pick and shovel stock that can serve a variety of different markets. The stock has tripled over the last five years, and there is a strong chance that it can do it again. While ON SiC based semiconductors largely address the EV and energy storage industry, there is a growing use case in data centers and power supplies.
They are not shying away from the competition, as they continue to make strategic investments for the future. This includes the expansion of their new SiC production facility in Bucheron, South Korea, expected to manufacture more than 1 million SiC wafers per year. Analyst’s project ON Semi FY23 EPS in the $5.09 – $5.37 range, reflecting approximately 25% YOY growth. Although top line revenue has stagnated in FY23, the upcoming fiscal year could be a much different story.
Allegro MicroSystems (ALGM)
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Allegro MicroSystems (NASDAQ:ALGM) is an American semiconductor company headquartered in the United States in Manchester, New Hampshire. They primarily supply power and sensing solutions for motion control and energy-efficient systems.
Allegro’s has a unique footing in the SiC market, with advanced diode, MOSFET, and gate driver ICs for automotive, industrial, and commercial applications. Their products are also seeing increased demand in data centers, which could be a huge business driver in the near future. However, what investors should get excited about is the company’s acceleration in revenue and profitability.
In Q2 FY24, Allegro’s revenue grew 16% YOY to $276 million, driven by continued strength in automotive up 31% in the quarter. Net income increased 30% YOY to $65.6 million, or $0.34 per share. E-Mobility was a large driver of top line growth, increasing by nearly 60% from the same quarter last year. More recently, Allegro completed the acquisition of Crocus Technology, to accelerate innovation in TMR sensing. As demand for advanced semiconductors continues to accelerate in 2024, ALGM is one of the top silicon carbide stocks to consider during the Q1 market dip.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Terel Miles is a contributing writer at InvestorPlace.com, with more than seven years of experience investing in the financial markets.
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