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Communication Services : Diversified Telecommunication Services | Large Cap Value
Company profile

Verizon Communications Inc. is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its reportable segments are Verizon Consumer Group and Verizon Business Group. Its Consumer segment provides wireless and wireline communications services. Its wireless services are provided across wireless networks in the United States (U.S.) under the Verizon brand. Its wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over its fiber-optic network under the Fios brand and over a traditional copper-based network. Its Business segment provides wireless and wireline communications services and products, including data, video and conferencing services, security and managed network services, local and long-distance voice services and network access to deliver various Internet of Things services and products.

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These 25 semiconductor stocks could rise as much as 43% with chips in short supply

8:43 am ET November 13, 2021 (MarketWatch)
Print

By Philip van Doorn

Chip makers' stocks have also been soaring as companies push into new industries

Just about every investor is aware that a shortage of semiconductors and related equipment, including microprocessors and chips, are in short supply while demand is high. And yet the stocks of this critical group trade relatively low to the broader stock market.

Below is a list of favorite semiconductor stocks among Wall Street analysts, based on a deep dive into the holdings of five exchange traded funds focused on the industry.

The chip shortage isn't the whole story -- innovation and new business have lit fires under some of the best-known semiconductor companies. Shares of Nvidia Corp. (NVDA) were up 49% from the end of September through Nov. 8, while Advanced Micro Devices Inc. (AMD) was up 46%.

These articles help explain the big moves:

Industry appears cheaply valued

The PHLX Semiconductor Index is considered the benchmark index for chip makers and companies that make equipment and systems used by them. It is tracked by the iShares Semiconductor ETF (SOXX), which holds all 30 stocks in the index and is weighted by market capitalization.

This means Nvidia is the top holding, making up 9.7% of the portfolio, and the top five investments, which also include Broadcom Inc. (AVGO), Intel Corp. (INTC), Qualcomm Inc. (QCOM) and Texas Instruments Inc. (TXN), account for 35.3% of the ETF's assets. The sixth-ranked company, AMD, is 4.5% of the portfolio.

SOXX trades at a forward price-to-earnings ratio of 20.9, based on consensus estimates among analysts polled by FactSet, while the forward P/E for the S&P 500 Index is 21.7. It's not unusual for the semiconductors to trade at a discount. However, it is unusual for there to be a broad shortage of the industry's products.

Here's how SOXX has traded relative to the S&P 500 over the past 10 years:

Underlining the discount for the semiconductor group is the expectation that the group will increase its sales and earnings much more quickly over the next two years.

Here are expected compound annual growth rates (CAGR) for sales and earnings per share through 2023, based on weighted consensus estimates among analysts polled by FactSet:

                               Estimated sales per share 
                                2021       2022       2023  Expected two-year sales CAGR 
iShares Semiconductor ETF     $77.72     $85.64     $94.61                         10.3% 
S&P 500                    $1,551.55  $1,654.79  $1,737.05                          5.8% 
                              2021     2022     2023  Expected two-year EPS CAGR 
iShares Semiconductor ETF   $22.17   $23.97   $35.59                       26.7% 
S&P 500                    $202.49  $219.39  $239.03                        8.6% 

ETF deep dive

To look beyond the SOXX 30, we reviewed five ETFs that follow different approaches, to come up with a broader initial list of stocks:

Together, removing duplicates, the five ETFs hold 65 stocks, with 62 covered by at least five analysts covered by FactSet.

Among the 62 companies, 25 have "buy" or equivalent ratings among at least 75% of the analysts. Only 10 of them are held by SOXX and only three (including Nvidia) are held by all five ETFs. Here they are, ranked by the implied 12-month upside, based on consensus price targets:

Company                                         Share "buy" ratings  Closing price -- Nov. 8  Consensus price target  Implied 12-month upside potential  Forward P/E  Held by 
Kulicke & Soffa Industries Inc. KLIC                            80%                  $58.15                  $83.00                                43%          8.8  PSI 
MKS Instruments Inc. MKSI                                       82%                 $158.84                 $213.20                                34%         13.3  SOXX, PSI 
Cirrus Logic Inc. CRUS                                          77%                  $79.61                 $106.36                                34%         14.3  XSD, FTXL 
Micron Technology Inc. MU                                       77%                  $74.56                  $95.33                                28%          8.7  SOXX, SMH, XSD, FTXL 
Taiwan Semiconductor Manufacturing Co. ADR TSM                  90%                 $120.91                 $153.01                                27%         26.0  SOXX, SMH 
Smart Global Holdings Inc. SGH                                 100%                  $58.24                  $72.00                                24%          9.1  XSD 
United Microelectronics Corp. ADR UMC                           81%                  $11.18                  $13.82                                24%         12.4  SOXX 
Ultra Clean Holdings Inc. UCTT                                 100%                  $59.21                  $72.58                                23%         12.6  PSI 
Allegro MicroSystems Inc. ALGM                                 100%                  $32.68                  $40.00                                22%         39.4  XSD, PSI 
Onto Innovation Inc. ONTO                                      100%                  $90.50                 $105.00                                16%         20.1  PSI 
SiTime Corp. SITM                                              100%                 $291.34                 $328.20                                13%         79.4  XSD 
Axcelis Technologies Inc. ACLS                                 100%                  $61.85                  $68.50                                11%         17.5  PSI 
ASML Holding N.V. ADR ASML                                      77%                 $849.93                 $935.00                                10%         44.6  SOXX, SMH 
Diodes Inc. DIOD                                                75%                 $107.73                 $117.67                                 9%         19.0  XSD, PSI 
Teradyne Inc. TER                                               84%                 $143.89                 $153.24                                 6%         22.8  SOXX, SMH, FTXL 
Camtek Ltd. CAMT                                               100%                  $44.25                  $46.60                                 5%         26.3  PSI 
Analog Devices Inc. ADI                                         79%                 $184.46                 $193.71                                 5%         26.0  SOXX, SMH, XSD, PSI, FTXL 
Nova Ltd. NVMI                                                 100%                 $128.77                 $135.00                                 5%         30.3  PSI 
Marvell Technology Inc. MRVL                                    80%                  $73.00                  $75.12                                 3%         43.2  SOXX SMH, XSD, FTXL 
Broadcom Inc. AVGO                                              84%                 $558.95                 $567.26                                 1%         18.3  SOXX, SMH, XSD, PSI, FTXL 
Synopsys Inc. SNPS                                              88%                 $342.91                 $341.14                                -1%         46.8  SMH 
Semtech Corp. SMTC                                              91%                  $90.52                  $88.30                                -2%         32.4  XSD 
MaxLinear Inc. MXL                                              75%                  $68.32                  $66.60                                -3%         21.4  XSD, PSI 
Impinj Inc. PI                                                 100%                  $76.04                  $73.57                                -3%        991.4  XSD 
Nvidia Corp. NVDA                                               81%                 $308.04                 $243.44                               -21%         71.6  SOXX, SMH, XSD, PSI, FTXL 
                                                                                                                                                                               Source: FactSet 

A screen can only be the beginning of your research, if you wish to hold individual stocks rather than make broad investments using ETFs or mutual funds. Click on the tickers for more about each company. Click here for Tomi Kilgore's detailed guide to the wealth of information for free on the MarketWatch quote page.

As you can see on the table, some of the stocks, despite being so well-regarded, have gotten ahead of their one-year price targets. Nvidia is a good example. Why do so many analysts rate it a buy, despite believing the stock is overheated? Because they are looking at years beyond a 12-month target.

Don't miss: 5 infrastructure stocks to buy now that Biden's bill has been passed, according to Jefferies

-Philip van Doorn

	

(END) Dow Jones Newswires

November 13, 2021 08:43 ET (13:43 GMT)

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