In particular, savvy investors tend to key in on semiconductor stocks as these companies will prove fundamental to technological and societal progress in the decades ahead. The bottom line is every investor should have several semiconductor stocks in his or her portfolio.
 
Let’s take a look at three of the top semiconductor stocks worth an in-depth look as we segue through the first financial quarter of the new year: Applied Materials (AMAT), Lam Research Corporation (LRCX), and STMicroelectronics (STM).
 
(If you are interested in learning more about the semiconductor industry, then please check out our Semiconductor Industry Report).

Applied Materials (AMAT - Get Rating)

Based in beautiful Santa Clara, CA, AMAT is one of the top equipment makers for the fabrication of semiconductors as well as LCDs and even solar photovoltaic cells/modules. Nearly two-thirds of AMAT’s revenue stems from its semiconductor operations. About one-quarter of AMAT’s revenue stems from its Applied Global Services division and 12% stems from its Adjacent Markets segment.

AMAT has B grades in the Quality, Sentiment, and Momentum components of the POWR Ratings. If you would like to learn how AMAT grades out in the Value, Growth, and Stability components, click here. Of the nearly 100 stocks in the Semiconductor & Wireless Chip industry, AMAT is ranked 24th. You can find out more about the Semiconductor & Wireless Chip space by clicking here.

The analysts have established an average price target of $132.83 for the stock, meaning it is likely to pop by more than 11%. The analysts’ high target for AMAT is $150 while the low target price is $72. AMAT has a surprisingly low forward P/E ratio of 23.48 considering it operates in the semiconductor space, a segment that typically trades at an egregiously high multiple of forward earnings.

Though AMAT is within $8 of its 52-week high, there is still room for the stock to move even higher. AMAT’s services division is growing at a 15% clip per quarter. If re-shoring continues, AMAT’s operations spread out across several countries will certainly prove more favorable than if those operations were centered in one country.

Lam Research Corporation (LRCX - Get Rating)

LRCX makes and markets semiconductor processing equipment that sets the stage for the creation of integrated circuits. Furthermore, LRCX is one of the top suppliers of equipment for businesses in the semiconductor industry.

LRCX has B grades in the Quality, Sentiment, and Momentum components of the POWR Ratings. If you are curious as to how LRCX fares in the Value, Stability, and Growth components, you can find out by clicking here. Of the 98 stocks in the Semiconductor & Wireless Chip sector, LRCX ranks 48th. Investors who would like to learn more about this industry can do so by clicking here.

LRCX has a forward P/E ratio of 24.12, meaning the stock might be slightly underpriced at its current trading level of $560. This is even though LRCX is within $50 of its 52-week high. LRCX components are used in 5G devices, meaning the company is well-positioned for growth across posterity.

STMicroelectronics (STM - Get Rating)

STM is a worldwide semiconductor company that designs, makes, and markets a slew of semiconductor integrated circuits and other components. STM has B grades in the Momentum, Value, and Sentiment components of the POWR Ratings. If you are curious as to how STM fares in the remaining components, you can find out by clicking here.

Of the 98 stocks in the Semiconductor & Wireless Chip industry, STM is ranked 13th. Investors can learn more about this industry by clicking here.

STM also has a reasonable forward P/E ratio of 23.01 even though the stock is only $3 away from its 52-week high of $43.02. The analysts have established a high target price of $47.60 for STM. Based on this expert analysis, STM’s upside potential is higher than one-quarter of the stocks within the large market cap category.

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AMAT shares were trading at $115.32 per share on Friday morning, up to $1.39 (+1.22%). Year-to-date, AMAT has gained 33.88%, versus a 2.11% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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