Back to top

Image: Bigstock

5 Top-Ranked Semiconductor Stocks to Buy on Solid Prospects

Read MoreHide Full Article

The semiconductor space has witnessed strong growth sa far this year. Notably, the broader iShares PHLX Semiconductor ETF (SOXX) is up 46.5% versus the SPDR S&P 500 ETF's (SPY) gain of 13.8% year to date.

The momentum is expected to continue per the latest data from The World Semiconductor Trade Statistics (WSTS), which expects the world semiconductor market to increase 5.1% from 2019 driven by memory and sensors. For 2021, growth is currently projected at 8.4% based on double-digit growth of memory and optoelectronics.

Growth Prospects Aplenty

Semiconductors are the building blocks of most emerging technologies like AI and IoT. In fact, semiconductors are setting the pace for technology modernization, in turn, digitizing healthcare, transport, financial systems, defense, agriculture, and retail, among others.

Moreover, robust adoption of cloud computing, autonomous vehicles, advanced driver assisted systems (ADAS), gaming, wearables, drones and VR/AR devices is fueling massive growth in the semiconductor space.

The accelerated deployment of 5G technology — the next-generation wireless revolution — is likely to spur further growth.

Moreover, the coronavirus-induced work-from-home and online learning wave has accelerated the demand for chips from PC manufacturers and data-center operators. Data-center operators have enhanced their capacities to accommodate the spike in demand for cloud services. The companies that provide design and other components for chip making are expected to benefit from this trend.

Our Picks

Here we pick five semiconductor stocks that are well-positioned to benefit from the above-mentioned trends. Apart from having strong fundamentals, these stocks sport a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Moreover, these stocks have outperformed the S&P 500 on a year-to-date basis.

Year-to-Date Performance


MACOM Technology Solutions (MTSI - Free Report) is benefiting from growing proliferation of cloud services. Also, high-performance analog components such as TIAs, CDRs and drivers, which are required in 100G deployment, are strengthening MACOM’s presence in the data center market.

This Zacks Rank #1 company is also set to launch products related to 5G and data center lasers and silicon photonics that are expected to drive growth. An improving free cash flow generating ability is another catalyst.

The Zacks Consensus Estimate for the company’s fiscal 2021 earnings is pegged at $1.63 per share, having been revised 10.1% upward in the past 30 days, suggesting 66.3% growth from the figure reported in the year-ago quarter.

Qorvo (QRVO - Free Report) also flaunts a Zacks Rank #1. The company is riding on gains from increased demand for 5G handsets and robust improvement in the Infrastructure and Defense Products business. Solid uptake of Bulk Acoustic Wave (BAW) filters is expected to boost the top line.

Moreover, an expanding portfolio of 5G base solutions amid accelerated deployment of 5G bodes well. Also, growing momentum for Qorvo’s Gallium Nitride (GaN) technology-based solutions is a positive.

The consensus mark for the company’s fiscal 2021 earnings is pegged at $8.61 per share, having been revised 22% upward in the past 30 days. The estimate calls for 36% year-over-year growth.

NVIDIA (NVDA - Free Report) is benefiting from the coronavirus-induced work-from-home and learn-at-home wave. This Zacks Rank #2 company has witnessed solid demand for GeForce desktop and notebook GPUs, which is boosting gaming revenues.

Moreover, a surge in Hyperscale demand remains a tailwind for the company’s Data Center business. Expansion of NVIDIA GeForce NOW is expected to drive user base. Further, solid uptake of AI-based smart cockpit infotainment solutions is a boon.

The company is also working with more than 320 automakers, tier-one suppliers, automotive research institutions, HD mapping companies and start-ups to develop and deploy AI systems for self-driving vehicles.

The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $9.66 per share, having moved 5.8% north in the past 30 days, indicating 66.8% growth from the figure reported in the year-ago quarter.

Synaptics (SYNA - Free Report) carries a Zacks Rank #2. The company is well poised to capitalize on its market-leading position for both touchpads and secure fingerprint sensors amid upbeat trends in PC shipments. Moreover, Synaptics’ digital audio solutions have witnessed strong demand with premium headsets that primarily serve enterprise customers.

Moreover, the acquisition of Broadcom’s wireless IoT connectivity business has expanded Synaptics’ offering of Wi-Fi, Bluetooth, and GPS chipsets for the IoT market, which is driving top-line growth. The addition of DisplayLink extended the company’s video interface market dominance. The company is benefiting from strong demand for video conferencing and enhanced entertainment products.

The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $6.83 per share, having moved 12.2% north in the past 30 days. It indicates 14.8% growth from the figure reported in the year-ago quarter.

Advanced Energy Industries (AEIS - Free Report) is one of the leading suppliers of power subsystems and process-control technologies to the semiconductor industry. Increasing investments in complex 3D NAND devices, DRAM and logic are a big positive for the company. Moreover, NAND manufacturers focus on adding layers. The additional layers should also drive demand for its power-control modules.

Moreover, rising investments in foundry/logic and NAND memory along with strengthening momentum across hyperscale customers and enterprise OEMs are key catalysts for this Zacks Rank #2 company. Additionally, the successful integration of Artesyn has resulted in significant synergies (roughly $30 million) and record accretion ($1 per share over the past four quarters).

The Zacks Consensus Estimate for its 2020 earnings is pegged at $5.10 per share, having moved 17.5% north in the past 30 days. It calls for 109% growth from the figure reported in the year-ago quarter.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>