Semiconductors! Are they ‘good as gold’? Or are they better than gold?

In my informed top-down strategist opinion, these tech-y stocks could serve as your sole environment, if you want to invest in long-term growth potential.

Month-after-month, semiconductor industries rank at the VERY TOP of all 265 Zacks Industries. Look at this table. I list the semiconductor industries found in the Info Tech sector. Zacks calls this Computers and Technology.

See What I Mean?

Of 696 publicly traded stocks in Computers and Technology, 84 are semi firms. Of those, 83 of 84 are in the top 37% of Zacks Industry Ranks. 37 listed semi stocks out of 84 in Zacks Industry Rank system fall above the top 17%. In short, semis stick out.

Semi makers and their helpers have become a standout.

What Stops You?

I think niche technical terms inhibit most semi investors…

Every day stock pickers are fearful. They do not understand semi technology – aka the terms involved in very specific industry niches. The table shows there are lots of technical semi niches to look into. Big new words scare most everyday investors.

For example, the Zacks Semiconductor Table listed solitary one-firm industry groups with the names Circuit Foundry, Memory, Programmable Logic and Wafer Components, among others. Wow! That confuses anyone without a technical background in Semiconductors.

4 ‘STRAY’ Semi Stocks & Their Specific Terms

These stocks are ‘stray’ in the sense of representing a single semiconductor company located inside a single semiconductor industry. Such attractive stocks get overlooked in the Zacks Industry Rank system sometimes. That is a BIG MISTAKE!

I list the 4 stray semi stock niches by market capitalization. I will explain each unique niche first, and then explore each stock’s narrative.

 (1) Circuit Foundry—

In microelectronics, the foundry model refers to the separation of a semiconductor fabrication plant operation (foundry) from an integrated circuit operation, into separate companies or business units.

Although many companies continue to both design and manufacture integrated circuits (achieving efficiency through vertical integration), these integrated device manufacturers (IDMs) are not alone in the marketplace.  

Economic forces have led to the existence of many companies that only design devices, known as fabless semiconductor companies, as well as merchant foundries that only manufacture devices under contract by other companies, without designing them.

Integrated circuit production facilities are expensive to build and maintain. Unless they can be kept at nearly full utilization, they will become a drain on the finances of the company that owns them.

The foundry model uses two methods to avoid these costs: fabless companies avoid costs by not owning such facilities.

Merchant foundries, on the other hand, find work from the worldwide pool of fabless companies, and by careful scheduling, pricing, and contracting keep their plants at full utilization.

Taiwan Semi (TSM Quick QuoteTSM - Free Report) ): This stock has a monster $172.95.06 billion market cap semi stock. It holds a Zacks #2 (BUY) rank. It holds a Zacks VGM score of A, based on a B in Value and an A in Growth.  Shares are priced at $33.35 each. The price to earnings growth (PEG) ratio is 0.98. The forward 12-month P/E is 14.65.  Annual earnings per share rise from $2.27 in 2016 to $2.34 in 2017.

Taiwan Semiconductor Manufacturer Co. is the world's largest dedicated integrated circuit (IC) foundry. As a foundry, the Company manufactures ICs for its customers based on their proprietary IC designs using its advanced production processes.

(2) Memory Chip—

Semiconductor memory is an electronic data storage device, often used as computer memory, implemented on a semiconductor-based integrated circuit.

There are many different types of implementations using various technologies.

(A) Most types of semiconductor memory have the property of random access, which means that it takes the same amount of time to access any memory location, so data can be efficiently accessed in any random order.

Semiconductor memory also has much faster access times than other types of data storage. A byte of data can be written to or read from semiconductor memory within a few nanoseconds, while access time for rotating storage such as hard disks is in the range of milliseconds.

For these reasons it is used for main computer memory (primary storage), to hold data the computer is currently working on, among other uses.

(B) This contrasts with data storage media such as hard disks and CDs, which read and write data consecutively and therefore the data can only be accessed in the same sequence it was written.

Micron (MU Quick QuoteMU - Free Report) ): This stock has a $31,64 billion market cap semi stock. It holds a Zacks #1 (STRONG BUY) rank.  It gets an excellent Zacks VGM score of A, based on an A in Value and a C in Growth. Shares are priced at $29 each.  The Price to Earnings Growth ratio is 1.00, which comes with a forward 12-month P/E of 9.97.  Annual earnings per share rise from $3.67 in 2016 to $4.95 in 2017.

Micron Technology, Inc. has established itself as one of the leading worldwide providers of semiconductor memory solutions.

The company's quality memory solutions serve customers in a variety of industries including computer and computer-peripheral manufacturing, consumer electronics, CAD/CAM, telecommunications, office automation, network and data processing, and graphics display.

The company's mission is to be the most efficient and innovative global provider of semiconductor memory solutions.

(3) Programmable Logic—

A programmable logic device (PLD) is an electronic component used to build reconfigurable digital circuits. Unlike a logic gate, which has a fixed function, a PLD has an undefined function at the time of manufacture. Before the PLD can be used in a circuit it must be programmed, that is, reconfigured.

Xilinx ): This stock has a  $14.43 billion market cap semi stock. It holds a Zacks #2 (BUY) rank.  It has a poor Zacks VGM score of D, based on a D in Value and a C in Growth.  Shares are priced at $58 each.  The Price to Earnings Growth ratio is 3.08, which comes with a forward 12-month P/E of 25.41.  Annual earnings per share rise from $2.29 in 2016 to $2.44 in 2017.

Xilinx, Inc. designs, develops and markets complete programmable logic solutions, including advanced integrated circuits, software design tools, predefined system functions delivered as cores of logic and field engineering support.

Its programmable logic devices include field programmable gate arrays and complex programmable logic devices. These devices are standard products that its customers program to perform desired logic functions.

(4) Wafer Components—

Wafer fabrication is a procedure composed of many repeated sequential processes to produce complete electrical or photonic circuits. Examples include production of radio frequency (RF) amplifiers,LEDs, optical computer components, and central processing units CPUs for computers. Wafer fabrication is used to build components with the necessary electrical structures.

The main process begins with electrical engineers designing the circuit and defining its functions, and specifying the signals, inputs, outputs and voltages needed. These electrical circuit specifications are entered into electrical circuit design software, such as SPICE, and then imported into circuit layout programs, which are similar to ones used for computer aided design.

This is necessary for the layers to be defined for photomask production. The resolution of the circuits increases rapidly with each step in design, as the scale of the circuits at the start of the design process is already being measured in fractions of micrometers. Each step thus increases circuit density for a given area.

The silicon wafers start out blank and pure. The circuits are built in layers in clean rooms.

Coherent (COHR Quick QuoteCOHR - Free Report) ): This stock has a $5.06 billion market cap semi stock. It holds a Zacks #1 (STRONG BUY) rank.  It has a poor Zacks VGM score of D, based on an F in Value and a B in Growth.  Shares are priced at $206 each. The forward 12-month P/E is 21.51.  Annual earnings per share rise from $9.58 in 2016 to $11.63 in 2017.

Coherent Inc. designs, manufactures, and supplies electro-optical systems and medical instruments utilizing laser, precision optic and microelectronic technologies.

The company integrates these technologies into a wide variety of products and systems designed to meet the productivity and performance needs of customers.

Major markets include the scientific research community; medical institutions, clinics and private practices; lasers also support commercial applications, ranging from semiconductors and disk mastering to light shows and entertainment.