5G stocks have been on investors’ radars for quite some time, given its potential to disrupt the global technology sector. With the increased use of cloud services by various businesses and governments, 5G’s broader bandwidth will enable more data to be accessed or stored more quickly. “5G is expected to be a catalyst and multiplier for widespread economic growth across many industries,” asserts Kosei Takiishi, senior research director at Gartner.
Many tech companies are building 5G ecosystems for private networks that deliver business-to-business services. Moreover, President Biden’s proposed $4 trillion Build Back Better plan is expected to boost semiconductor production along with basic equipment and infrastructure required for 5G distribution. Consequently, the global 5G services market is expected to grow at a CAGR of 46.2% over the next seven years to achieve revenue of $664.75 billion by 2028.
Therefore, we think it is best to invest in Texas Instruments Incorporated (TXN), Siemens AG (SIEGY), and Analog Devices, Inc. (ADI) now before their share prices rise due to huge demand in their industry.
Texas Instruments Incorporated (TXN)
TXN designs, manufactures and sells semiconductors to electronics designers and manufacturers worldwide . The company operates through two segments—Analog and Embedded Processing. The Analog segment offers power products to manage power requirements at various levels. The Embedded Processing segment offers connected microcontrollers, digital signal processors (DSPs) and applications processors. TXN also provides Digital Light Processing (DLP) products for use in projectors to create HD images, calculators and application-specific integrated circuits.
TXN’s DRV3255-Q1—a highly integrated Grade 0 brushless DC (BLDC) motor driver—was introduced on February 22.The motor helps designers shrink the motor system size by almost 30%, while providing the industry’s highest gate-drive current for increased protection and output power.
In January, TXN released the industry’s highest-performing solution for wireless battery management systems (BMS) that features independently assessed functional safety concepts and demonstrates how designers can remove heavy, expensive, maintenance-prone cabling and improve the reliability and efficiency of EVs. Also, TXN introduced the new BQ79616-Q1 automotive battery monitor and balancer. It reports high-accuracy voltage measurements in systems up to 800 V. In addition, the BQ79616-Q1 streamlines Automotive Safety Integrity Level (ASIL) D compliance in hybrid electric vehicles (HEVs) and electric vehicles (EVs).
For the fourth quarter (ended December 31, 2020), the company’s revenue has increased 21.7% year-over-year to $4.08 billion. Its gross profit has increased 26.2% year-over-year to $2.65 billion. Also, TXN’s operating profit was $1.81 billion, up 45.2% year-over-year. The company’s $1.69 billion in net income for the fourth quarter represents a 57.8% rise year-over-year. Its EPS has increased 60.7% year-over-year to $1.80.
Analysts expect TXN’s EPS to improve 26.6% year-over-year for the current quarter, ended March 31, to $1.57. It surpassed the Street’s EPS estimates in each of the trailing four quarters. And its consensus revenue estimate of $4.14 billion for the next quarter represents a 27.8% rise on a year-over-year basis.
The stock has gained 98.2% over the past year and closed Thursday’s trading session at $192.06.
TXN’s strong fundamentals are reflected in its POWR Ratings. The stock has a B overall rating, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Quality, and a B grade for Sentiment. We have also graded TXN for Value, Momentum, Growth, and Stability. Click here to access all TXN’s ratings.
TXN is ranked #16 of 98 stocks in the B-rated Semiconductor & Wireless Chip industry.
Siemens AG (SIEGY)
Headquartered in Munich, Germany, SIEGY is a technology company that focuses in the areas of electrification, automation, and digitalization. The company currently operates through five segments: Digital Industries, Smart Infrastructure, Mobility, Siemens Healthineers and Financial Services (SFS). Digital Industries offers products and system solutions for automation used in discrete and process industries. Its Smart Infrastructure segment supplies and intelligently connects energy systems and building technologies. Siemens Healthineers supplies technology to the healthcare industry and engages in diagnostic imaging and laboratory diagnostics.
SIEGY will be presenting the SimoticsS SD motor series in the Digital Enterprise Virtual Experience at the Hannover Messe 2021 on April 13. It provides long-term efficiency standards, energy-saving, lower operating costs, and reduced CO2 emissions. SIEGY teamed up with On, an Italian startup company, on March 31, to deliver charging stations and a cloud-based software for charging infrastructure management. On March 29, 2021, Mercedes-Benz (DDAIF) and SIEGY announced their plans on advancing digitalization and automation in the automotive industry, supported by the State of Berlin.
SIEGY’s revenue was €14.07 billion for the fiscal 2021 first quarter, ended December 31, 2020, which represents an improvement of 2.9% year-over-year. Its gross profit was €5.32 billion for the first quarter, up 6.7% year-over-year. While its income from continuing operations was €1.48 billion, representing a 24.2% rise year-over-year, its net income was €1.50 billion, up 37.6% year-over-year. Also, the company’s EPS increased 29.8% year-over-year to €1.70.
A consensus EPS estimate of $0.91 for the next quarter, ending June 30, 2021, represents a 127.5% rise year-over-year. SIEGY also surpassed the consensus EPS estimates in each of the trailing four quarters. Also, its consensus revenue estimate of $16.53 billion for the next quarter, ending June 30, 2021, represents a 3.2% rise from the prior year period.
The stock has rallied 110.2% over the past year to close last Thursday’s trading session at $83.50.
SIEGY’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system.
The stock has a B grade for Value and Growth also. In addition to the POWR Ratings grades we’ve just highlighted, one can see SIEGY’s ratings for Momentum, Stability, Quality, and Sentiment here.
SIEGY is ranked #19 of 46 stocks in the A-rated Industrial – Manufacturing industry.
Analog Devices, Inc. (ADI)
ADI designs, manufactures and markets a portfolio of solutions that leverage high-performance analog, mixed-signal and digital signal processing technology, including integrated circuits (ICs), algorithms, software and subsystems for use in industrial, automotive, consumer, and communication markets worldwide. Its products include Analog Products, Converters, Amplifiers/Radio Frequency, Other Analog, Power Management and Reference, and DSP Products.
On April 1, ADI gained unconditional European Union (EU) antitrust clearance for its $21 billion acquisition of rival Maxim Integrated. In March, ADI announced an ASIC-based radio platform for O-RAN compliant 5G radio units that is designed to shorten time to market and meet the evolving needs of 5G networks. And in February, ADI and Volvo Cars (VLVLY) announced that Volvo Cars’ first pure electric SUV—the Volvo XC40 Recharge—will feature ADI’s integrated circuits (ICs) that support battery management system (BMS) and Automotive Audio Bus (A2B).
The company’s revenue has increased 19.6% year-over-year to $1.56 billion for the fiscal 2021 first quarter ended January 30, 2021. ADI’s adjusted gross margin was $1.09 billion, which represents more than a 22% improvement year-over-year. The company’s adjusted operating income was $634.83 million, up 31.9% year-over-year. Its adjusted net income has also increased nearly 40% year-over-year to $536.69 million for the quarter. Also, ADI’s adjusted EPS has increased 39.8% year-over-year to $1.44.
Analysts expect ADI’s EPS for the current quarter, ending April 30, 2021, to be $1.45, up 34.3% year-over-year. It’s earnings surprise history looks impressive; the company has surpassed the consensus EPS estimate in each of the trailing four quarters. Also, for the current quarter, analysts expect ADI’s revenue to be $1.60 billion, representing a 20.9% rise from the prior-year period.
The stock has gained 90.7% over the past year to close Thursday’s trading session at $160.38. It has gained 93.5% since hitting its 52-week low of $82.90.
It’s no surprise that ADI has an overall B rating, which equates to Buy in our POWR Ratings system.
The stock has a B grade for Momentum and Quality. Click here to see the additional POWR Ratings for ADI (Growth, Value, Sentiment, and Stability).
ADI is ranked #36 in the Semiconductor & Wireless Chip industry.
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TXN shares were trading at $196.90 per share on Monday afternoon, up $4.84 (+2.52%). Year-to-date, TXN has gained 20.69%, versus a 9.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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