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Forget Micron, Buy These 4 Top Semiconductor Stocks Instead

Aniruddha Ganguly
·5 mins read

Micron MU is having a rough year owing to coronavirus-induced softness in the memory space. The company is suffering from bleak memory-chip demand as customers are adjusting inventories in response to the economic recession caused by the outbreak.

Moreover, soft server demand from several enterprise OEM customers is a concern for this Zacks Rank #5 (Strong Sell) company. Additionally, Intel's CPU shortages coupled with macroeconomic uncertainties are likely to pose challenges to the company.

Further, overall macro-economic uncertainty in the semiconductor space is expected to cast a pall over Micron’s prospects in the near term. Markedly, Gartner expects worldwide semiconductor revenues to decline 0.9% in 2020.

Further, Micron’s heavy dependence on China is a headwind due to the ongoing tit-for-tat trade war between the United States and China. Further, suspension of chip shipments to Huawei, in response to the export ban imposed by the U.S. government, has been detrimental to the top line.

4 Better Bets Than Micron

Though Micron’s prospects may not appear appealing at the moment, there are some semiconductor stocks that offer good investment opportunities right now. These stocks have a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Per the Zacks’ proprietary methodology, stocks with this favorable combination offer good investment opportunities.

Moreover, these stocks have outperformed Micron on a year-to-date basis.

Year-to-date Price Performance

 

Synaptics SYNA sports a Zacks Rank #1 and has a Growth Score of B. This San Jose, CA-based company is well poised to capitalize on its market-leading position for both touchpads and secure fingerprint sensors amid upbeat trends in PC shipments.

Further, incremental adoption of the company’s edge SoCs integrated with AI and embedded neural network capabilities for smart video and audio devices is driving top-line growth.

Additionally, the acquisition of Broadcom’s AVGO wireless IoT connectivity business (Jul 23) and the buyout of DisplayLink (Jul 31) strengthen Synaptics’ portfolio offerings.

Markedly, Broadcom’s IoT connectivity business adds Wi-Fi, Bluetooth and GPS connectivity solutions to Synaptics’ portfolio. The addition of DisplayLink will further extend the company’s video interface market dominance.

The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $6.40 per share, having moved 39.4% north in the past 60 days, indicating 7.6% year-over-year growth.

Magnachip Semiconductor MX carries a Zacks Rank #2 (Buy). This designer and manufacturer of analog and mixed-signal semiconductor products is benefiting from an expanding clientele. Moreover, its growing dominance in the display driver is a key catalyst.

Magnachip is expected to gain from rising demand for OLED DDIC, primarily due to increasing demand for OLED displays by smartphone manufacturers. Moreover, the divestiture of the foundry services business and associated fab has made the company’s balance sheet less leveraged, thereby improving its financial flexibility.

Magnachip has a Growth Score of A. The Zacks Consensus Estimate for its fiscal 2020 earnings is pegged at 25 cents per share, having been revised 38.9% upward in the past 60 days.

MACOM Technology Solutions MTSI is benefiting solid momentum across data center and telecom markets. Growing proliferation of cloud services is benefiting both domestic and international deployment of the company’s solutions. Also, high-performance analog components such as TIAs, CDRs and drivers, which are required in 100G deployment, are strengthening MACOM’s presence in the data center market further.

Moreover, MACOM expects strong 5G network deployments, rising demand for its RF and microwave products, strength across defense applications and growing data center traffic to continue driving its top line. This Zacks Rank #1 company has a Growth Score of A.

The consensus mark for MACOM’s 2020 earnings is pegged at 96 cents per share, having been raised 41.2% over the past 60 days. The earnings estimate figure suggests growth of 431% year over year.

Qorvo QRVO is benefiting from increasing demand for 5G smartphones and robust improvement in the Infrastructure and Defense Products business. Solid uptake of Bulk Acoustic Wave (BAW) filters, as economies have started to reopen, is expected to boost the top line.

Moreover, expanding portfolio of 5G base solutions amid accelerated deployment of 5G bodes well. Also, growing momentum for Qorvo’s Gallium Nitride (GaN) technology-based solutions is a positive. Improving iPhone sales despite the coronavirus outbreak is a tailwind for this Zacks Rank #2 company.

Qorvo has a Growth Score of B. The consensus mark for its fiscal 2021 earnings is pegged at $7.06 per share, having been revised 26.8% upward in the past 60 days. The consensus mark calls for 11.5% year-over-year growth.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Micron Technology, Inc. (MU) : Free Stock Analysis Report
 
Broadcom Inc. (AVGO) : Free Stock Analysis Report
 
Synaptics Incorporated (SYNA) : Free Stock Analysis Report
 
MagnaChip Semiconductor Corporation (MX) : Free Stock Analysis Report
 
Qorvo, Inc. (QRVO) : Free Stock Analysis Report
 
MACOM Technology Solutions Holdings, Inc. (MTSI) : Free Stock Analysis Report
 
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