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Broadcom and 5 Other Top Semiconductor Stocks to Buy
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Broadcom Limited (AVGO - Free Report) has been one of the most consistent performers in the semiconductor industry. Shares of this Zacks Rank #1 (Strong Buy) company have increased almost 16% on a year-to-date basis driven by robust revenue growth and expanding margins.
Broadcom’s latest quarterly results were impressive. Non-GAAP earnings (excluding share-based compensation expense) were $2.47 per share, which comfortably exceeded the Zacks Consensus Estimate by 8% (18 cents). We note that the company has posted positive earnings surprise of 7% over the trailing four quarters.
Per Bloomberg “The company’s earnings are an indicator of demand across the mobile phone, wireless and fixed-line and computer industries.” Management expects robust growth in the wireless unit which in turn will help the company meet fourth-quarter 2016 revenue target, which is currently pegged at $4.09 billion (+/- $75 million).
Broadcom has also witnessed significant earnings estimate revision over the last 60 days. The EPS estimate for the current year increased 4% (37 cents) to $9.69 per share over the last 60 days.
Wireless Key Growth Driver
Broadcom continues to focus on expanding its market share in the wireless connectivity market by effectively serving set-top box, wireless access, smartphone, laptop and notebook customers.
These products are a part of the consumer technology market, the retail sales of which per Consumer Technology Association’s (CTA) estimates will be driven by Internet of Things (IoT) this year to reach $286.6 billion. (Read More: Semiconductor Industry Outlook - September 2016)
With one of the most diversified communications platforms in the industry, Broadcom remains well poised for healthy long-term growth. Over the next 3-5 years, the company’s earnings are anticipated to increase at 15% rate.
Ambarella Inc. (AMBA - Free Report) : Headquartered in Santa Clara, CA, the company develops video compression and image processing semiconductors. The EPS estimate for the current year surged 19.4% (25 cents) to $1.54 per share over the last 60 days.
Applied Optoelectronics Inc. (AAOI - Free Report) : Headquartered in Sugar Land, TX, the company designs, develops and manufactures advanced optical devices, packaged optical components, optical subsystems, laser transmitters and fiber optic transceivers. Amazon, Microsoft and Cisco Systems are the key customers. Current year EPS estimate has soared 104% (26 cents) to 51 cents over the last 60 days.
AXT Inc. (AXTI - Free Report) : Headquartered in Fremont, CA, the company designs, develops, manufactures and distributes high-performance compound semiconductor substrates also known as wafers. Over the last 60 days, its fiscal 2017 EPS estimates have surged a massive 225% (9 cents) to 13 cents per share.
Cirrus Logic Inc. (CRUS - Free Report) : Austin, TX-based Cirrus Logic is a premier supplier of high performance analog circuits and advanced mixed-signal chip solutions. Apple and Samsung Electronics are the two major customers. Over the last 60 days, current year EPS estimate has increased 12.5% (32 cents) to $2.89 per share.
Pixelworks Inc. (PXLW - Free Report) : San Jose, CA-based Pixelworks designs, develops and markets semiconductors and software that enable the visual display of broadband content through a wide variety of electronic devices. Hitachi Ltd. and Seiko Epson Corp are the major customers. Current year EPS estimate has narrowed to a loss of 33 cents per share from a loss of 38 cents over the last 60 days.
Zacks Rank #2
Year-to-date Return : 19%
Last EPS Surprise: 45.5%
Average 4-quarter Surprise: 30.26%
Long term EPS Growth Estimate: 20%
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Broadcom and 5 Other Top Semiconductor Stocks to Buy
Broadcom Limited (AVGO - Free Report) has been one of the most consistent performers in the semiconductor industry. Shares of this Zacks Rank #1 (Strong Buy) company have increased almost 16% on a year-to-date basis driven by robust revenue growth and expanding margins.
BROADCOM LTD Price and Consensus
BROADCOM LTD Price and Consensus | BROADCOM LTD Quote
Broadcom’s latest quarterly results were impressive. Non-GAAP earnings (excluding share-based compensation expense) were $2.47 per share, which comfortably exceeded the Zacks Consensus Estimate by 8% (18 cents). We note that the company has posted positive earnings surprise of 7% over the trailing four quarters.
Per Bloomberg “The company’s earnings are an indicator of demand across the mobile phone, wireless and fixed-line and computer industries.” Management expects robust growth in the wireless unit which in turn will help the company meet fourth-quarter 2016 revenue target, which is currently pegged at $4.09 billion (+/- $75 million).
Broadcom has also witnessed significant earnings estimate revision over the last 60 days. The EPS estimate for the current year increased 4% (37 cents) to $9.69 per share over the last 60 days.
Wireless Key Growth Driver
Broadcom continues to focus on expanding its market share in the wireless connectivity market by effectively serving set-top box, wireless access, smartphone, laptop and notebook customers.
These products are a part of the consumer technology market, the retail sales of which per Consumer Technology Association’s (CTA) estimates will be driven by Internet of Things (IoT) this year to reach $286.6 billion. (Read More: Semiconductor Industry Outlook - September 2016)
With one of the most diversified communications platforms in the industry, Broadcom remains well poised for healthy long-term growth. Over the next 3-5 years, the company’s earnings are anticipated to increase at 15% rate.
Alternative Picks
Here we have picked five semiconductor stocks that have performed similar to Broadcom. They also have a favorable Zacks Rank #1 or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMBARELLA INC Price and Consensus
AMBARELLA INC Price and Consensus | AMBARELLA INC Quote
Ambarella Inc. (AMBA - Free Report) : Headquartered in Santa Clara, CA, the company develops video compression and image processing semiconductors. The EPS estimate for the current year surged 19.4% (25 cents) to $1.54 per share over the last 60 days.
APPLIED OPTOELE Price and Consensus
APPLIED OPTOELE Price and Consensus | APPLIED OPTOELE Quote
Applied Optoelectronics Inc. (AAOI - Free Report) : Headquartered in Sugar Land, TX, the company designs, develops and manufactures advanced optical devices, packaged optical components, optical subsystems, laser transmitters and fiber optic transceivers. Amazon, Microsoft and Cisco Systems are the key customers. Current year EPS estimate has soared 104% (26 cents) to 51 cents over the last 60 days.
AXT INC Price and Consensus
AXT INC Price and Consensus | AXT INC Quote
AXT Inc. (AXTI - Free Report) : Headquartered in Fremont, CA, the company designs, develops, manufactures and distributes high-performance compound semiconductor substrates also known as wafers. Over the last 60 days, its fiscal 2017 EPS estimates have surged a massive 225% (9 cents) to 13 cents per share.
CIRRUS LOGIC Price and Consensus
CIRRUS LOGIC Price and Consensus | CIRRUS LOGIC Quote
Cirrus Logic Inc. (CRUS - Free Report) : Austin, TX-based Cirrus Logic is a premier supplier of high performance analog circuits and advanced mixed-signal chip solutions. Apple and Samsung Electronics are the two major customers. Over the last 60 days, current year EPS estimate has increased 12.5% (32 cents) to $2.89 per share.
PIXELWORKS INC Price and Consensus
PIXELWORKS INC Price and Consensus | PIXELWORKS INC Quote
Pixelworks Inc. (PXLW - Free Report) : San Jose, CA-based Pixelworks designs, develops and markets semiconductors and software that enable the visual display of broadband content through a wide variety of electronic devices. Hitachi Ltd. and Seiko Epson Corp are the major customers. Current year EPS estimate has narrowed to a loss of 33 cents per share from a loss of 38 cents over the last 60 days.
Confidential: Zacks' Best Investment Ideas
Would you like to see a hand-picked "all-star" selection of investment ideas from the man who heads up Zacks' trading and investing services? Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand. Click for his selected trades right now >>