The semiconductor industry witnessed an unanticipated rise in demand during the COVID-19 pandemic due to the varied use of semiconductors in electronic devices, wireless connectivity, life-saving equipment, and critical infrastructure. The heightened demand led to a supply-demand imbalance globally, which still exists. The importance of semiconductors across industries has compelled the government to move to fortify America’s semiconductor supply chains through robust investments in U.S. chip production and innovation.
The market is slowly stabilizing with the semiconductor component supply constraints “expected to gradually ease through 2022, and prices will stabilize with the improving inventory situation,” according to Alan Priestley, research vice president at Gartner. According to the organization, global semiconductor revenue is projected to reach $676 billion in 2022, representing an increase of 13.6% from 2021. The industry is expected to hit $700.60 billion in 2023.
Given the industry’s solid growth prospects, we think top-rated semiconductor stocks Taiwan Semiconductor Manufacturing Company Limited (TSM), Amkor Technology, Inc. (AMKR), and Intel Corporation (INTC), which are trading near their 52-week lows, could soar in price in the near term.
Taiwan Semiconductor Manufacturing Company Limited (TSM)
Headquartered in Hsinchu City, Taiwan, TSM manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, the United States, and internationally.
TSM’s revenue increased 35.5% year-over-year to NT$491.08 billion ($17.57 billion) in its fiscal first quarter ended March 31, 2022. Its income from operations grew 48.7% from the year-ago value to NT$223.79 billion ($8.01 billion), while its net income improved 45.2% year-over-year to NT$202.87 billion ($7.23 billion). Its EPS increased 45.1% from its year-ago value to NT$7.82.
The $1.46 consensus EPS estimate for its fiscal second quarter, ending June 30, 2022, represents a 57% improvement year-over-year. The $17.41 billion consensus revenue estimate for the same quarter represents a 30.7% increase from the same period last year. It has an impressive earnings surprise history; it topped Street EPS estimates in each of the trailing four quarters.
TSM’s shares have slumped 27.1% in price year-to-date to close the last trading session at $87.69. TSM is currently trading 2.7% above its 52-week low of $85.39.
TSM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which translates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
TSM has an A grade in Quality and a B in Momentum, Stability, Sentiment, and Growth. It is ranked #24 of 95 stocks in the B-rated Semiconductor & Wireless Chip industry.
Beyond what is stated above, we have also rated TSM for Value. Get all the TSM ratings here.
Amkor Technology, Inc. (AMKR)
AMKR in Tempe, Ariz., provides outsourced semiconductor packaging and test services to meet application and chip-specific requirements. Its test services include Advanced Products and Mainstream Products.
AMKR’s total net sales increased 20.4% from the prior-year quarter to $1.60 billion in its fiscal first quarter, ended March 31, 2022. Its gross profit for the quarter was $325.33 million, reflecting a 22.5% increase year-over-year, while its operating income stood at $210.01 million, up 45.4% year-over-year. Its net income per share increased 40.8% from the prior-year quarter to $0.69.
The Street expects AMKR’s EPS for its fiscal year ending Dec. 31, 2022, to improve 8.8% year-over-year to $2.85. The $6.70 billion consensus revenue estimate for the same period represents a 9.1% increase year-over-year. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has slumped 25% in price year-to-date to close yesterday’s trading session at $18.60. AMKR is currently trading 3% above its 52-week low of $18.05.
It is no surprise that AMKR has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade in Value and a B in Momentum and Sentiment. It is ranked #25 in the Semiconductor & Wireless Chip industry.
In addition to the POWR Rating grades I have just highlighted, one can see AMKR’s growth, Stability, and quality ratings here.
Intel Corporation (INTC)
INTC Santa Clara, Calif., designs, manufactures, and sells computer products and technologies worldwide. The company operates through CCG; DCG; IOTG; Mobileye; NSG; PSG; and All Other segments.
In May 2022, INTC introduced Project Amber to meet the growing security needs of organizations. Amber is an independent trust authority that provides cloud-to-edge, and on-premises trust assurance to organizations and lays down a secured foundation for confidential computing, responsible AI, and quantum-resistant crypto. This should be strategically beneficial for the company.
INTC also announced the launch of seven new mobile processors to the 12th Gen Intel® Core™ mobile family on May 10, 2022. The new HX processors are the world’s best mobile workstation platform that can deliver high-performance levels for professional workflows like CAD, animation, and visual effects. This is a significant addition to its offerings and should enhance its revenue stream.
For its fiscal first quarter, ended April 2, 2022, INTC’s net cash from operating activities increased 10.2% year-over-year to $5.89 billion. Its operating income grew 17.5% from its year-ago value to $4.34 billion. Its net income for the quarter stood at $8.11 billion, reflecting a 141.4% increase year-over-year. Furthermore, its EPS was $1.98, up 141.5% from the prior-year quarter.
Analysts expect INTC’s revenue for its fiscal quarter, ending Sept. 30, 2022, to come in at $19.11 billion, indicating a 5.;7% increase year-over-year. Also, the company’s revenue is expected to grow 1.1% year-over-year to $75.50 billion in the current fiscal year. INTC also beat the consensus EPS estimates in the trailing four quarters.
INTC’s shares have slumped 16.8% in price year-to-date to close the last trading session at $42.84. INTC is currently trading 2% above its 52-week low of $42.01.
INTC’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade in Value and a B in Quality. The stock is ranked #18 in the Semiconductor & Wireless Chip industry.
To get INTC’s ratings for Momentum, Growth, Stability, and Sentiment, click here.
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TSM shares were trading at $90.42 per share on Friday morning, up $2.73 (+3.11%). Year-to-date, TSM has declined -24.56%, versus a -15.37% 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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