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Semiconductors Poised to Continue the Good Run: 4 Top Gainers

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Zacks Equity Research
·5 min read
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Tech stocks inched higher on Dec 15 on increased hopes of a fiscal stimulus bill along with the rollout of a vaccine in the country. Notably, the tech-laden Nasdaq Composite rose 1.3% to close at a record-high of 12,595.06. In particular, semiconductor stocks gained significantly. In fact, the PHLX Semiconductor Index (SOX) has gained 4.1% month to date following an 18.6% gain in November.

Per the latest development, congressional leaders seemed to make progress on the coronavirus relief package, as mentioned in a CNBC article. The article said that Senate Majority Leader Mitch McConnell sounded optimistic and stated that they are making “significant progress” toward arriving at an agreement over the bipartisan aid. The availability of the vaccine along with the passing of further relief should bebeneficial for semiconductor stocks. This is because manufacturing is an essential part of semiconductors that depends on the resumption of economic activities.

Nonetheless, semiconductors have already done well this year despite the production snags due to the pandemic and supply chain constraints. In fact, the Semiconductor Industry Association stated that in October, global semiconductor sales increased 3.1% over September to $39 billion and 6% on a year-over-year basis. Notably, this was the largest percentage year-over-year increase in sales since March. This is because the pandemic shifted the focus to rapid digitization. With working from home becoming the norm, technologies that aid this set up like computers or Internet connectivity, became important.

Moreover, there has been an increased shift toward gaming in the United States as people have turned more to in-home entertainment. This means that people have had to spend more on graphics processors in order to play hardware intensive titles. In fact, per a report by the NPD Group, the third quarter saw sales of video game content rising 24% year over year to $10.04 billion with hardware sales increasing 16% from the year-ago period. Meanwhile, working from home has also led to a rising demand for cloud storage. Moreover, the shift to the staying at home scenario means that people require faster Internet speeds for virtual meetings or even group video calls. This is sure to lead to a quicker adoption of the 5G technology which promises higher speeds.

With a stimulus package in sight, semiconductors are sure to receive another leg up. It is also set to build on the current trends too. Moreover, the World Semiconductor Trade Statistics forecast that the world semiconductor market will gain 5.1% in 2020 followed by a gain of 8.4% in 2021 driven primarily by gains in memory chips.

4 Semiconductor Stocks to Invest in Now

From vaccine optimism to stimulus expectations to the new normal trends bolstering the need for digitization, all have stood in good stead for semiconductor stocks. Hence, it will be prudent now to invest in semiconductor stocks with sound fundamentals that stand to gain in the near term. Notably, we have selected four such stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Micron Technology, Inc. MU designs, manufactures and sells memory and storage products in the United States. The company provides memory products for the cloud server, enterprise, client, graphics, and networking markets, as well as for smartphone and other mobile-device markets; SSDs and component-level solutions for the enterprise and cloud, client, and consumer storage markets, among others. It currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 26.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 28.3%.

Amkor Technology, Inc. AMKR provides outsourced semiconductor packaging and test services in the United States. The company provides semiconductor testing services; flip chip scale package products for use in smartphones, tablets, and other mobile consumer electronic devices; flip chip stacked chip scale packages that are used to stack memory, and as applications processors in mobile devices, among others. It currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 24% over the past 60 days. The company’s expected earnings growth rate for next year is 8.9%.

NVIDIA Corporation NVDA operates as a visual computing company in the United States. Under the GPU segment, the company offers processors, which include GeForce for PC gaming and mainstream PCs; GeForce NOW for cloud-based gaming; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications, among others. It currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 5.8% over the past 60 days. The company’s expected earnings growth rate for next year is 18.8%.

Skyworks Solutions, Inc. SWKS, along with its subsidiaries, designs, develops, manufactures and markets proprietary semiconductor products, including intellectual property in the United States. The company provides its products for use in automotive, broadband, cellular infrastructure, entertainment and gaming, smartphone, etc. It currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 10% over the past 60 days. The company’s expected earnings growth rate for the current year is 22%.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>


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Micron Technology, Inc. (MU) : Free Stock Analysis Report
 
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