Semiconductor and wireless chips stocks have been on a roll these past couple months as people and businesses have purchased computers for use amidst the quarantine. Though computers are still a fairly costly purchase, they are an absolute necessity for modern day living and working, especially when forced to remain indoors to minimize the spread of COVID-19.
A couple companies in the semiconductor space are especially attractive in light of recent events: ASML, MRVL and LSCC.
ASML Holding N.V. (ASML)
Semiconductor businesses need technology systems to make the computing hardware we all rely upon for conducting business, playing computer games and processing information for other purposes. ASML provides these technology systems for semiconductor businesses, providing lithography systems for the manufacture of integrated circuits.
ASML engineers, manufactures, integrates and advertises highly complex systems that serve as the foundation for semiconductor chip production. Now that the demand for computer chips has escalated, ASML’s systems are proving more important that ever before.
The POWR Ratings have ASML ranked as #2 of 86 stocks in the semiconductor and wireless chip space with As in every POWR Component but for its industry rank in which it rates a B. The average analyst price target for the stock is $330, meaning it has at least 5% upside, if not more.
ASML is the lone tech industry provider of the valuable extreme lithography tech that is essential for making cutting edge semiconductors. This tech is also likely to be used in the future to make DRAM memory. In other words, ASML belongs in your portfolio for the long haul. Buy and hold.
Marvell Technology Group Ltd. (MRVL)
Microprocessor integrated circuits are essential to modern day computing. You have the chance to invest in a global provider of these integrated circuits through MRVL. This company designs, develops and advertises such digital signal processing circuits.
MRVL was once known as the top supplier of chips for computer hard drives yet expanded its horizons with the purchase of Cavium in the summer of ’18. The Cavium acquisition empowered MRVL to provide processors compatible with software to permit functionality in data centers.
The analysts’ high target for MRVL is $35, so the stock has at least $5 of upside when viewed from a bull’s perspective. MRVL’s top line is likely to spike by at minimum of 3% on a year-over-year basis, partially because of new deals inked with Nokia and Samsung stemming form the arrival of 5G.
The increase in people working from home will also help MRVL sell that many more storage chips. MRVL storage chips are essential for hard drives as well as solid-state drives used in computers, the cloud and servers. Take a look at MRVL’s POWR Ratings and you will find the stock is ranked fourth of 86 companies in the semiconductor and wireless chip category with As in all POWR component categories but for its industry rank.
Lattice Semiconductor Corporation (LSCC)
Programmable logic devices and related software might sound like Greek to you yet these words are quite meaningful to tech geeks. In plain English, programmable logic devices are the standard components used in semiconductors with the potential for configuration by end customers. LSCC makes and markets these products and their accompanying software.
LSCC has bounced back from the stock market meltdown caused by the coronavirus, shooting all the way up to $24, merely one dollar below the 52-week high of $25 and change. Though the average analyst price target for this stock is $23, there upper end of analyst expectations is $27.
The POWR Ratings have LSCC rated as an “A” meaning Strong Buy. LSCC has an A grade in all POWR components ranging from Peer Grade to Trade Grade and beyond. The lone exception is the stock’s industry grade of B. If you are on the prowl for a slightly under the radar 5G play, LSCC belongs in your portfolio.
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ASML shares were trading at $328.52 per share on Friday afternoon, up $8.55 (+2.67%). Year-to-date, ASML has gained 11.49%, versus a -5.13% 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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