The rising demand for semiconductor chips from several industries such as automotive and electronics has created a massive imbalance between supply and demand. The resultant increase in prices has been favorable for the semiconductor industry. As a result, semiconductor stocks are gaining investors’ attention. This is evident from the SPDR S&P Semiconductor ETF’s (XSD) 18.1% gains over the past three months versus the SPDR S&P 500 Trust ETF’s (SPY) 6.4% returns.

While the semiconductor manufacturers are increasing production to meet the high demand with government support, the supply shortage may not end anytime soon. The increasing need for advanced devices, featuring a wide range of innovative technologies, such as artificial intelligence (AI), 5G connectivity, and the internet of things (IoT), should keep the demand for semiconductors. According to the Fortune Business Insights report, the global semiconductor market is projected to grow at a CAGR of 8.6% between 2021 and 2028.

Given this backdrop, Wall Street analysts expect under-$5 semiconductor stocks Resonant Inc. (RESN) and Summit Wireless Technologies, Inc. (WISA) to more than double in the next 12 months.

Resonant Inc. (RESN)

A late-stage development company, RESN designs and develops filters for radiofrequency and front-ends used in the mobile device, automotive, medical, internet-of-things, and related industries internationally. It uses Infinite Synthesized Networks technology, a software platform to configure and connect resonators that are building blocks of RF filters.

On October 7, 2021, RESN expanded its multi-year commercial partnership with Murata Manufacturing Co., Ltd. to develop 5G XBAR RF filters. George B. Holmes, Chairman and CEO of RESN, said, “This agreement brings us one step closer towards XBAR technology reaching the market with dominant scale and solving many of the challenges next-generation networks face today.”

RESN’s deferred revenue increased 550% year-over-year to $4.40 million for the fiscal third quarter ended September 30, 2021. The company’s net loss decreased 0.9% year-over-year to $9 million. Also, its loss per share came in at $0.14, down 6.7% year-over-year.

Analysts expect RESN’s EPS and revenue to increase 24.4% and 252.7% year-over-year, respectively, in fiscal 2022. Wall Street analysts expect the stock to hit $6.13 in the near term, which indicates a potential upside of 236.8%.

Summit Wireless Technologies, Inc. (WISA)

A technology company, WISA develops, manufactures, and sells modules and integrated circuits for the home entertainment and wireless audio market in the United States, Europe, and the Asia Pacific. It offers TX modules for integration into televisions, audio-visual receivers, media hubs, USB or HDMI dongles, and speaker systems.

On November 2, 2021, WISA launched the WiSA Certified Retailer Program, enabling retailers to be a part of the WiSA brand through features on WiSA websites, dedicated marketing, advertising, channel sales support, and advanced notification of new WiSA Certified and WiSA Ready products. Tony Ostrom, President of WISA, said, “The opportunity to integrate the WiSA brand with a wide variety of retailers expands our reach and supports our goal of driving 2 million visitors to websites by the end 2021.”

WISA’s total revenue increased 198% year-over-year to $1.80 million for the fiscal third quarter ended September 30, 2021. The company’s gross margin was 28%, compared to 17.1% in the third quarter of 2020. Also, its cash and cash equivalents were $16.10 million as of September 30, 2021, compared to $7.40 million as of December 31, 2020.

For fiscal 2021, analysts expect WISA’s EPS and revenue to increase 58.3% and 167.9% year-over-year, respectively. Wall Street analysts expect the stock to hit $5.75 in the near term, which indicates a potential upside of 332.3%.

RESN shares were unchanged in after-hours trading Wednesday. Year-to-date, RESN has declined -29.06%, versus a 26.76% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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