The S&P 500 retreated by more than 1% in the first week of the New Year due to the underperformance of the growth sectors like technology. Furthermore, the tech-heavy Nasdaq slumped 4.5% for the week. Tech shares were battered primarily on the Fed’s signal that it will raise interest rates, with mega-cap tech stocks finishing the week lower.

However, amid the market’s downtrend, the Consumer Technology Association predicted at CES 2022 that the U.S. consumer technology industry would generate a record $505 billion in revenue in 2022, representing a 2.8% increase over 2021. Extended work from home arrangements and the ongoing digital transformation should drive the industry’s growth.

The shares of Taiwan Semiconductor Manufacturing Company Limited (TSM), Intel Corporation (INTC), Micron Technology, Inc. (MU), and STMicroelectronics N.V. (STM) withstood the market’s downtrend last week on the back of the companies’ strong financials and product innovations. So, we think one could consider adding these names to one’s watchlist.

Click here to checkout our Semiconductor Industry Report for 2022

Taiwan Semiconductor Manufacturing Company Limited (TSM)

Headquartered in HsinChu, Taiwan, TSM manufactures and sells integrated circuits and semiconductors. The company’s products are used in personal computers (PCs), wired and wireless communication systems, industrial equipment, and consumer electronics. TSM serves in North America, Europe, Japan, China, and South Korea.

TSM’s net revenue increased 16.3% year-over-year to NTD414.67 billion ($14.97 billion) in the third quarter, ended Sept. 30, 2021. The company’s gross profit increased 11.7% from the year-ago value to NTD212.75 billion ($7.68 billion). Its income from operations rose 14% from its year-ago value to NTD171 billion ($6.17 billion). Also, the company’s net income increased 13.9% year-over-year to NTD156.48 billion (5.65 billion).

Analysts expect TSM’s revenue for its fiscal year 2022 to be $74 billion, representing 30.2% growth year-over-year. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Also, its EPS is expected to grow 21.2% in fiscal 2021 and 20.2% in fiscal 2022. Its stock price has increased 11.4% over the past three months. It returned 2.7% last week.

TSM’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 distinct factors, each with its own weighting.

The stock has an A grade for Quality and Momentum. We have also graded TSM for Sentiment, Stability, Growth, and Value. Click here to access all TSM’s ratings. TSM is ranked #51 of 99 stocks in the A-rated Semiconductor & Wireless Chip industry.

Intel Corporation (INTC)

INTC in Santa Clara, Calif., is a global manufacturer and designer of technologies for the cloud, smart, and connected devices for retail, industrial, and consumer uses. The company operates through DCG; IOTG; Mobileye; NSG; PSG; CCG, and All Other segments. Accelerators, Connectivity, Memory and Storage, Platform products, and Boards and Systems are some of INTC’s products.

This month, INTC launched the new H-series mobile processors featuring the flagship Intel Core i9-12900HK. The company’s new performance hybrid accelerator should pace the future of computers. Also, with the introduction of 12th Gen Intel Core mobile processors, INTC should help its users to unlock new experiences and set a new standard performance with a faster processor for a laptop.

During the third quarter, ended Sept. 25, 2021, INTC’s net revenue increased 4.6% year-over-year to $18.1 billion. The company’s gross margin grew 10.3% from its year-ago value to $10.75 billion. Its operating income rose 3.3% from the prior-year quarter to $5.23 billion. Also, the company’s net income increased 55.6% year-over-year to $7 billion.

INTC 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 at a rate of 3.2% per annum over the next five years. INTC has gained 2.4% in price over the past year. The stock gained 3.8% last week.

INTC’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has an A grade for Value and a B grade for Quality.

In addition to the POWR Rating grades I’ve just highlighted, one can see INTC’s ratings for Growth, Stability, Momentum, and Sentiment here. The stock is ranked #8 in the Semiconductor & Wireless Chip industry.

Micron Technology, Inc. (MU)

MU in Boise, Idaho, provides micron memory and storage solutions that accelerate the transformation of information into intelligence. The company also delivers a broad portfolio of technologies, such as artificial intelligence and autonomous vehicles. It operates through four segments: its Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit.

Last month, MU announced plans for its new memory design center in Midtown Atlanta to expand the company’s reach into the Southeast. The company believes that this new site should increase its access to Atlanta’s rich pool of technical talent to further advance its memory design and engineering leadership and build strong partnerships with several institutions in the region.

MU’s revenue increased 33.2% year-over-year to $7.69 billion in its fiscal first quarter, ended Dec. 02, 2021. The company’s gross margin grew 105.4% from its year-ago value to $3.57 billion. Its operating income rose 203.8% from the prior-year quarter to $2.63 billion. Also, the company’s net income increased 187.2% year-over-year to $2.31 billion.

Analysts expect MU’s revenue for its fiscal year 2022 to be $32.22 billion, representing 16.3% growth year-over-year. 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 grow 47.4% in fiscal 2021 and 28.9% in fiscal 2022. Its stock price has increased 33.9% over the past three months. The stock returned 1.4% last week.

It is no surprise that MU has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has a B grade for Quality and Growth.

Click here to see the additional POWR Ratings for MU (Value, Momentum, Stability, and Sentiment). MU is ranked #5 in the Semiconductor & Wireless Chip industry.

STMicroelectronics N.V. (STM)

Headquartered in Geneva, Switzerland, STM is a microelectronics and semiconductor chip manufacturer. The company operates through its Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. STM also offers products that include  Data Converters, Audio ICs, and many other solutions.

This month, STM revealed a new family of GaN power semiconductors in the STPOWER portfolio. The company believes that this product can significantly reduce energy use and enable slimmer designs in a huge variety of electronic products.

For the third quarter, ended Oct. 2, 2021, STM’s net revenues increased 19.9% year-over-year to $3.2 billion. The company’s gross profit grew 38.7% from its year-ago value to $1.33 billion. Its operating income increased 83.9% from the prior-year quarter to $605 million. Also, the company’s net income increased 95.9% year-over-year to $476 million.

STM’s revenue is expected to increase 10.5% year-over-year to $13.94 billion in its fiscal year 2022. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Furthermore, its EPS is expected to increase by 66.7% in fiscal 2021 and 25% in fiscal 2022. Over the past six months, the stock has soared 33.1% in price. It gained 2.1% last week.

STM’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Value and Momentum.

In addition to the POWR Rating grades I have just highlighted, one can see STM’s ratings for Growth, Stability, Sentiment, and Quality here. STM is ranked #21 in the Semiconductor & Wireless Chip industry.

Click here to checkout our Semiconductor Industry Report for 2022

TSM shares were trading at $124.15 per share on Monday afternoon, up $0.65 (+0.53%). Year-to-date, TSM has gained 3.19%, versus a -2.48% 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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