3 Strong Buy Semiconductor Stocks to Consider Now
Semiconductor stocks were battered by market volatility earlier this year, but tech has made a strong recovery, and with several interesting trends like the Internet of Things and artificial intelligence on the rise, it is still an exciting time to be investing in chip-making corner of the technology sector.
While tech behemoths like Microsoft MSFT and Apple AAPL may hog all the headlines, it has really been the companies powering their technologies—the semiconductor manufacturers—that have been garnering the attention of Wall Street.
Indeed, as our “Computer and Technology” sector has gained about 22% over the past year, semiconductor companies have been a driving factor behind its growth. The aforementioned emerging tech trends have created new consumer demand, and the semiconductor makers are delivering.
Luckily, the proven Zacks stock picking methods are effective across all industries. Check out these Zacks Rank #1 (Strong Buy) semiconductor stocks right now:
1. Mellanox Technologies, Inc. (MLNX)
Mellanox Technologies is a leading supplier of semiconductor-based, interconnected products to world-class server, storage, and infrastructure OEMs. The company's VPI enables standard communication protocols to operate over any converged network with the same software solution.
MLNX is on our radar after its fifth consecutive earnings beat. It is also an explosive growth pick, with earnings and revenue expected to improve by 104% and 25%, respectively, this year. The stock’s valuation is ever-so stretched at 24x forward 12-month earnings, but with its PEG sitting at just 1.8, investors are clearly still getting a good price for its growth outlook.
2. Vishay Intertechnology (VSH)
Vishay Intertechnology is a global manufacturer and supplier of discrete semiconductors. The company has a broad portfolio of unique passive and active solutions that are tailored to the “things” being controlled in the IoT. Vishay markets its portfolio to manufacturers of everything from biometric monitoring systems to fitbands and smart appliances.
On top of its solid Zacks Rank, Vishay is holding “A” grades in the Value and Momentum categories of our Style Scores system. The stock is trading at just 12x earnings and sports a PEG of 1.3 and a P/S of 1.2. Plus, it is generating strong earnings estimate revision momentum, as Vishay has watched its full-year EPS estimates improve by 12% within the past month.
3. Cypress Semiconductor (CY)
Cypress Semiconductor is a leading provider of high-performance digital and mixed-signal integrated circuits. It makes products designed for the automotive, industrial, home automation and appliances, consumer electronics and medical products industries.
The company has also emerged as a leader in the Internet of Things industry after shelling out $550 million for Broadcom’s IoT business in 2016. Cypress’ “WICED” IoT platform is part of one of the largest such portfolios in the industry.
Cypress is an explosive growth pick and sports an “A” grade in the Growth category of our Style Scores system. Earnings and projected to improve by over 50% in 2018, and the company has a long-term annual projected EPS growth rate of 16%. Meanwhile, revenue growth is hitting double-digit percentages. CY is low priced and volatile, but it should continue to benefit from secular growth trends like IoT.
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Cypress Semiconductor Corporation (CY) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Mellanox Technologies, Ltd. (MLNX) : Free Stock Analysis Report
Vishay Intertechnology, Inc. (VSH) : Free Stock Analysis Report
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