The applications of semiconductor chips, which contain millions and sometimes billions of transistors, are increasing rapidly across several industries, including consumer electronics, automobiles, manufacturing, and medical equipment. Unfortunately, this increasing demand, faced with a pandemic-led slowdown in production, has spelled a shortage of semiconductor chips worldwide.

However, according to an International Data Corporation (IDC) report, the chip shortage is expected to normalize by the middle of 2022. Furthermore, according to the report, the semiconductor market is expected to reach $600 billion by 2025, growing at a 5.3% CAGR, compared to the 3% – 4% growth seen historically.

Given this backdrop, we think it could be wise to add under-$20 semiconductor stocks indie Semiconductor, Inc. (INDI), Pixelworks, Inc. (PXLW), and inTEST Corporation (INTT) to one’s watch list. Wall Street analysts expect these stocks to continue rallying in the coming months.

Click here to checkout our Semiconductor Industry Report for 2021

indie Semiconductor, Inc. (INDI)

Automotive technology solutions provider INDI, which is headquartered in Aliso Viejo, Calif., supports the automotive tech revolution with automotive semiconductors and software platforms. It is focused on developing edge sensors for advanced driver assistance systems, including light detection and ranging (LiDAR), connected car, user experience, and electrification applications.

On October 25, 2021, INDI announced that it had agreed with Analog Devices, Inc. (ADI) to purchase Symeo GmbH, a Munich-based radar hardware and software development specialist for emerging safety system applications. The co-founder and CEO of INDI said, “With the addition of this world-class engineering organization, we are accelerating indie’s entry into the radar market and, as a result, we believe we are better positioned to capture billion-dollar strategic programs among global automotive customers.”

For the third quarter, ended September 30, 2021, INDI’s revenues increased 60% year-over-year to $12.20 million. The company’s non-GAAP gross profit increased 33.2% year-over-year to $5.22 million. Also, its non-GAAP gross margin increased by 90 basis points sequentially to 43%.

Analysts expect INDI’s revenues for the quarter ending March 31, 2022, to increase 155.1% year-over-year to $20.70 million. Over the past three months, the stock has gained 70% in price to close yesterday’s trading session at $15.56. Wall Street analysts expect the stock to hit $18.67 in the near term, which indicates a potential 18.7% upside.

Pixelworks, Inc. (PXLW)

PXLW in San Jose, Calif., is a leading innovator in video display processing technology. It designs, develops, and markets leading-edge video display processors, software, and IP for the full range of video display applications.

On August 17, 2021, PXLW announced that Vivo’s iQOO brand had incorporated its Pixelworks X5 Pro visual processor for its iQOO 8 series phone, which will elevate its visual performance to a higher level. This represents the increased demand for the company’s solutions.

PXLW’s revenues for the third quarter, ended September 30, 2021, increased 85.3% year-over-year to $15.20 million. The company’s gross profits increased 101% year-over-year to $7.98 million. Also, its net loss came in at $3.84 million compared to $8.14 million in the prior-year quarter.

For the quarter ending December 31, 2021, analysts expect PXLW’s EPS and revenues to increase 54.5% and 70.9%, respectively, year-over-year to $0.05 and $16.47 million. Over the past year, the stock has gained 141% in price to close yesterday’s trading session at $5.35. Wall Street analysts expect the stock to hit $9 in the near term, which indicates a potential 68.2% upside.

inTEST Corporation (INTT)

INTT is a global supplier of precision-engineered solutions. Its solutions are used in manufacturing and testing across a wide range of markets, including automotive, defense/aerospace, energy, industrial, semiconductor, and telecommunications. INTT is headquartered in Mount Laurel, N.J.

On October 29, 2021, INTT announced the acquisition of Videology Imaging Solutions Inc. and Videology Imaging Solutions Europe B.V. for $12 million in cash. INTT’s President and CEO, Nick Grant, Jr., said, “Through it we expand our process technology solutions, diversify our reach into key targeted markets and broaden our customer base. It builds on our process technology platforms by expanding our automation capabilities to add future product solutions with imaging data and analytical tools.”

For its third quarter, ended September 30, 2021, INTT’s net revenue increased 46.4% year-over-year to $21.1 million. The company’s gross profit increased 61.1% year-over-year to $10.4 million. Also, its non-GAAP adjusted net earnings grew 230.7% year-over-year to $2.48 million, while its non-GAAP EPS increased 228.5% year-over-year to $0.23.

Analysts expect INTT’s EPS and revenues for its fiscal year 2021 to increase 2,900% and 57%, respectively, year-over-year to $0.9 and $84.52 million. It has surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 195.4% in price over the past year to close yesterday’s trading session at $16.29. Wall Street analysts expect the stock to hit $21.25 in the near term, which indicates a potential 30.5% upside.

Click here to checkout our Semiconductor Industry Report for 2021

INDI shares were trading at $15.69 per share on Wednesday morning, up $0.13 (+0.84%). Year-to-date, INDI has gained 45.82%, versus a 26.41% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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