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With several interesting trends like the Internet of Things and artificial intelligence on the rise, it is an exciting time to be investing in the technology sector. What’s more, it is also a profitable time to be a tech-focused investor, as this space has been among the strongest performing sectors all year.

And while the behemoths like Microsoft (MSFT - Free Report) and Apple (AAPL - Free Report) may hog all the headlines, it’s really been the companies powering their technologies—the semiconductor manufacturers—that have had a strong year on the markets.

Indeed, as our Computer and Technology sector has gained nearly 15% year-to-date, 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.       Lam Research Corporation (LRCX - Free Report)

Lam Research is a designer and manufacturer of semiconductor processing equipment used in the fabrication of integrated circuits. The company is recognized as a leading supplier of front-end wafer processing equipment to the worldwide semiconductor industry.

In its latest report, Lam posted earnings of $2.80 per share and revenue of $2.15 billion, beating our respective consensus estimates of $2.54 and $2.13 billion. The company will wrap up its fiscal year in the current quarter, and our consensus estimates call for full-year totals to mark EPS growth of 57% and sales growth of 36%. Looking ahead, we’ve already seen eight positive revisions to Lam’s next-year earnings estimates.

 

2.       Microchip Technology (MCHP - Free Report)

Microchp Technology is a manufacturer of microcontroller, memory, and analog chips. The company is a leader in several IoT-related fields, including automotive and wireless connectivity. MCHP shares have gained more than 30% year-to-date, but this stock could be poised to break even higher given the right catalyst, and might have just that. Indeed, earlier this week the company upped its sales and EPS guidance for 1Q18, sending shares higher in after-hours trading. Our current consensus estimates are calling for EPS growth of 26% and revenue growth of 12% this fiscal year, but it could also be a stock that continues to benefit as the IoT grows over the next few years.

 

3.       Alpha and Omega Semiconductor (AOSL - Free Report)

Alpha and Omega Semiconductor is a manufacturer of power semiconductors. Its portfolio of products targets high-volume end-market applications, such as notebooks, netbooks, flat panel displays, and mobile phone battery packs. In the most recent quarter, the company Zacks Consensus Estimate for earnings for the eighth consecutive time. It also surpassed our consensus revenue estimate for the sixth consecutive time.

We’ve seen three positive revisions to the company’s full-year and next-year earnings within the past 60 days, so it’s clear that analysts are feeling more confident about the company’s prospects. The stock has been on a nice run recently, but it still sits about 20% lower than its 52-week high, so there’s plenty of room for gains before investors even have to worry about breaking into a new range.

 

Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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