The semiconductor industry has been under pressure due to supply chain disruptions that hampered production targets. However, the Senate passed the CHIPS-plus or Chips and Science Act on Wednesday, which includes more than $52 billion in funding to support domestic production as well as tax credits to encourage investment in the industry.
Additionally, the semiconductor industry has been witnessing heightened demand due to its varied usage in electronic devices; critical infrastructure; advanced technologies like Artificial Intelligence (AI), IoT, and wireless connectivity; which is expected to drive continued growth. The global semiconductor market is expected to grow at a CAGR of 12.2% to reach $1.38 trillion by 2029.
Given this backdrop, it could be wise to buy and hold semiconductor stocks, Photronics, Inc. (PLAB), Cirrus Logic, Inc. (CRUS), QUALCOMM Incorporated (QCOM), MaxLinear, Inc. (MXL), and Semtech Corporation (SMTC).
Photronics, Inc. (PLAB)
PLAB manufactures and sells photomask products and services in the United States and internationally.
PLAB’s revenues increased 28% year-over-year to $204.51 million in the fiscal quarter ended May 1, 2022. Its operating income grew 150.4% from the year-ago value to $52.11 million, while its net income came in at $45.44 million, up 178.4% year-over-year. The company’s EPS grew 188.2% from the prior-year quarter to $0.49 in the same period.
Analysts expect PLAB’s revenue for the fiscal quarter ending July 2022 to come in at $210 million, indicating an increase of 23.1% year-over-year. Also, the company’s EPS is expected to grow 78.6% year-over-year to $0.50 in the same period.
PLAB gained 76.4% over the past year to close the last trading session at $23.21. It gained 87.5% over the past nine months.
PLAB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PLAB has a B grade in Quality, Sentiment, Value, and Growth. It is ranked #3 of 94 stocks in the B-rated Semiconductor & Wireless Chip industry.
Beyond what is stated above, we’ve also rated PLAB for Momentum and Stability. Get all the PLAB ratings here.
Cirrus Logic, Inc. (CRUS)
CRUS, a fabless semiconductor company, provides low-power and high-precision mixed-signal processing solutions in the United States and internationally.
For the fiscal fourth quarter ended March 26, 2022, CRUS’s net sales increased 66.9% year-over-year to $489.97 million. Its gross profit grew 74.7% from the year-ago value to $258.73 million. Net income for the quarter stood at $96.41 million, reflecting a 281.4% increase year-over-year. Moreover, its EPS was $1.64, up 290.5% from the prior-year quarter.
Street expects CRUS’ revenue for the fiscal quarter ended June 2022 to come in at $365.99 million, indicating a 32% year-over-year increase. Its EPS is expected to improve 53% year-over-year to $0.83. The company also beat the consensus EPS estimates in three of the trailing four quarters.
CRUS’ shares have gained 11.2% over the past three months to close the last trading session at $81.82.
CRUS’ sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our POWR Ratings system.
The company also has an A grade in Growth and a B in Value and Quality. The stock is ranked #4 in the Semiconductor & Wireless Chip industry.
To get CRUS’ ratings for Momentum, Stability, and Sentiment, click here.
QUALCOMM Incorporated (QCOM)
QCOM engages in developing and commercializing foundational technologies for the wireless industry worldwide. The company operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI).
On July 28, QCOM announced strengthening its strategic partnership with Samsung Electronics Co. Ltd. to deliver leading premium consumer experiences for Samsung galaxy devices. QCOM and Samsung also agreed to expand their collaboration with Snapdragon® platforms for premium products, including smartphones, tablets, extended reality, and more.
These collaborations reinforce the company’s success record and reaffirm its commitment to expanding technology leadership.
For the fiscal third quarter ended June 26, 2022, QCOM’s total revenues increased 35.7% year-over-year to $10.94 billion. Its operating income grew 103.7% from the year-ago value to $4.47 billion. Net income for the quarter stood at $3.73 billion, reflecting an 84% increase year-over-year. Moreover, the company’s EPS was $3.29, up 85.9% from the prior-year quarter.
Street expects QCOM’s EPS for the quarter ending September 2022 to improve 27.3% year-over-year to $3.25. The consensus revenue estimate of $11.86 billion for the same period represents a 27.2% increase year-over-year. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 16.9% over the past nine months to close the last trading session at $153.42.
The company has an overall rating of A, translating to Strong Buy in our proprietary rating system.
QCOM has a B grade in Sentiment, Growth, and Quality. It is ranked #8 in the Semiconductor & Wireless Chip industry.
Click here for additional POWR Ratings for Value, Stability, and Momentum for QCOM.
MaxLinear, Inc. (MXL)
MXL is an integrated circuit design company that provides radiofrequency (RF), high-performance analog, and mixed-signal communications systems-on-chip solutions (SoCs) for the connected home, wired and wireless infrastructure, and industrial and multi-market applications worldwide.
On June 27, MXL announced the next-generation wideband modem development within its MxL852xx product line to enable backhaul networks that accelerate 5G deployments. This single-chip solution will enable network OEMs and operators to deliver ultra-high-capacity payloads over longer distances with the lowest total cost of ownership. This should expand the company’s revenue stream.
MXL’s net revenues increased 36.3% year-over-year to $280.01 million in the fiscal quarter ended June 30, 2022. Its gross profit improved 46% year-over-year to $164.35 million over the period, while its income from operations increased 1,669.8% from its year-ago value to $39.01 million. Its net income per share increased 3,900% year-over-year to $0.40 in the same period.
MXL’s revenue for the quarter ended September 2022 is expected to come in at $282.59 million, indicating a 23% year-over-year growth. The company’s EPS is expected to increase 35.9% year-over-year to $1.02 for the same quarter. The company topped Street EPS estimates in each of the trailing four quarters, which is impressive.
MXL has gained 16.7% over the past month to close the last trading session at $41.12.
MXL’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, translating to Buy in our proprietary rating system.
MXL is rated A in Growth and a B in Value and Quality. It is ranked #20 in the same industry.
To see additional POWR Ratings for Momentum, Stability, and Sentiment for MXL, click here.
Semtech Corporation (SMTC)
SMTC designs, develops, manufactures, and markets analog and mixed-signal semiconductor products and advanced algorithms.
On June 21, SMTC announced the launch of a SaaS chip-to-Cloud service, LoRa Cloud™ Locator, that uses SMTC’s LoRa Cloud Modem & Geolocation services to demonstrate the asset tracking capabilities of LoRa Edge™. The service allows customers to experience the power of LoRa Edge™ devices and evaluate the platform’s accuracy and power consumption capabilities, and should be in demand.
On June 9, the company announced that Mt. Titlis, an integrated service provider supplying control center console products and intelligent control collaboration system solutions, has chosen to integrate SMTC’s BlueRiver® AV over the IP technology platform to optimize its Smart City Integrated Command Center, allowing for high quality, uncompressed audio and video processing and transmission.
“Semtech’s collaboration with Mt. Titlis showcases the unmatched benefits of the BlueRiver AV over IP platform in delivering the best possible audio and video experience available today,” said Don Shaver, VP of marketing of video products for SMTC’s Signal Integrity Products Group.
For the fiscal quarter ended May 1, 2022, SMTC’s net sales increased 18.7% year-over-year to $202.15 million. Its gross profit grew 24.2% from the year-ago value to $130.25 million. Operating income for the quarter stood at $47.05 million, reflecting a 68.2% increase year-over-year. Moreover, its EPS was $0.59, up 63.9% from the prior-year quarter.
Analysts expect SMTC’s revenue in the quarter ending July 2022 to come in at $208.27 million, indicating an increase of 12.6% year-over-year. Its EPS is expected to improve 47.3% year-over-year to $0.74.
SMTC’s shares have gained 4.8% over the past month to close the last trading session at $59.59.
It is no surprise that SMTC has an overall rating of A, equating to Strong Buy in our POWR Ratings system.
The company also has an A grade in Quality and a B in Growth. In the Semiconductor & Wireless Chip industry, the stock is ranked #5.
To get SMTC’s ratings for Momentum, Stability, Value, and Sentiment, click here.
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PLAB shares were trading at $22.92 per share on Thursday afternoon, down $0.29 (-1.25%). Year-to-date, PLAB has gained 21.59%, versus a -14.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
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