The increasing dependency on advanced technologies, such as artificial intelligence (AI), Internet of Things (IoT), and 5G wireless solutions, has caused sustained demand for semiconductors. According to the Semiconductor Industry Association (SIA), the worldwide sales of semiconductors increased 29.2% year-over-year to $44.5 billion in June 2021. Also, substantial government and private investments to tackle the global chip shortage should help the industry meet the surging demand, which is primarily coming from the consumer electronics and electric vehicles industries.
The global semiconductor market is expected to reach $803.15 billion by 2028, registering an 8.6% CAGR.
Therefore, we think fundamentally sound semiconductor stocks ASE Technology Holding Co., Ltd. (ASX) and Everspin Technologies, Inc. (MRAM) could be solid bets now. These two stocks are currently trading below $10 but hold significant upside potential.
ASE Technology Holding Co., Ltd. (ASX)
Taiwan-based ASX provides independent semiconductor, electronic manufacturing, packaging, and testing services in the United States, Europe, Asia, and internationally. The company also offers IC wire bonding packages, interconnect materials, system-in-package products, and other semiconductor test-related services.
ASX’s total net revenue increased 18% year-over-year to NT$126.93 billion ($4.58 billion) for the second quarter ended June 30, 2021. Its gross profit increased 31.9% from its year-ago value to NT$24.80 billion ($895.47 million). The company’s operating income grew 56.3% from the prior-year quarter to NT$13.17 billion ($475.54 million), while its EPS increased 43.8% year-over-year to NT$ 2.3 ($0.08).
A $19.88 billion consensus revenue estimate for the current year represents 22.7% growth from the same period last year. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Also, its EPS is expected to increase 61.4% in the current year and 100% in the current quarter.
Moreover, the stock has gained 52.7% in price over the past nine months and 112.8% over the past year to close yesterday’s trading session at $8.92.
ASX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ASX is also rated A for Value, Momentum, and Sentiment. In addition, within the A-rated Semiconductor & Wireless Chip industry, the stock is ranked #27 of 98 stocks.
To see additional POWR Ratings for Growth, Quality, and Stability for ASX, click here.
Everspin Technologies, Inc. (MRAM)
MRAM is a manufacturer and distributor of magnetoresistive random-access memory (MRAM) in the United States and internationally. The Chandler, Ariz.-based concern offers Toggle MRAM, Spin-Transfer Torque MRAM, and Tunnel MagnetoResistance Sensors, as well as foundry services for embedded MRAM. In addition, the company offers its products for applications in the data center, industrial, automotive, medical, aerospace, and transportation market.
In June, MRAM announced that Lucid Motors had designed its 256 Kilobit MRAM into the master powertrain system of the innovative Lucid Air all-electric luxury sedan. The company believes that this introduction of new technology will provide efficiency and will be present in the long term with non-volatile memory and alternative memory technologies.
For the second quarter, ended June 30, 2021, MRAM’s total revenue increased 0.19% year-over-year to $11.85 million. The company’s gross profit rose 38.6% from its year-ago value to $7.2 million. Its gain from operations came in at $0.456 million, compared to a $1.09 million loss from operations in the prior-year quarter. The company reported EPS of $0.01, versus a $0.07 loss per share in the second quarter of 2020.
MRAM’s revenue is expected to increase 14.4% year-over-year to $53.9 million in its fiscal year 2022. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. The company’s EPS is expected to increase 125% in the current year and 166.7% next year. The stock has gained 31% in price over the past six months and 24.3% over the past nine months to close yesterday’s trading session at $6.68.
MRAM’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The stock also has an A grade for Sentiment, and a B for Value and Momentum.
In addition to the POWR Rating grades we’ve just highlighted, one can see MRAM’s ratings for Growth, Stability, and Quality here. Again, the stock is ranked #41 in the Semiconductor & Wireless Chip industry.
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ASX shares were trading at $9.23 per share on Friday afternoon, up $0.31 (+3.48%). Year-to-date, ASX has gained 61.87%, versus a 20.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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