1. Magnachip Semiconductor Corporation (NYSE:MX)
Number of Hedge Fund Investors: 22
The best semiconductor penny stock to buy is Magnachip Semiconductor Corporation (NYSE:MX) which develops, produces, and distributes analog and mixed-signal semiconductor platform solutions for use in consumer, industrial, communications, the Internet of Things, computing, and automotive applications.
Magnachip Semiconductor (MX) is an enthralling investing narrative that is packed with danger and potential. Currently trading at $4.92, the exposure of the firm to China has a notable opportunity for an upside of 90.35% and an average target of $9.67 per the analysts, as it allows access to a big and rising market; nevertheless, it also carries major geopolitical concerns. Uncertainty is increased by trade tensions and possible confrontations. Magnachip has a healthy balance sheet with $171.6 million in cash, despite reporting losses (annual revenue down over the past 4 years). However, sustained financial failures might undermine this advantage. It is a small company in the $611 billion semiconductor market, thus, margin pressure is increased by fierce competition from bigger competitors that outspend it on R&D.
Nonetheless, history has demonstrated the semiconductor industry’s incredible capacity for recovery. Over time, the stock has seen volatility. Magnachip has a strong EPS power during industry upcycles; in 2017 it was $1.10, and in 2020 it was $7.54. Shares have been acquired by insiders, including the CEO, Young-Soon Kim has been gradually buying up shares; as of right now, Kim has around 525,000 shares. This indicates confidence in the company. Moreover, Insider Monkey tracked 22 hedge fund investors as of Q1 2024. Oaktree Capital Management, led by Howard Marks, is the company’s largest shareholder, owning 2,849,858 shares valued at $15.90 million, or 7.5% of all outstanding shares. The resurgent demand for smartphones in China, fresh design victories in electric cars, and emerging potential in AI and humanoid robotics are all positive aspects of the business. Industry projections indicate that the semiconductor sector will rise by $2062.59 billion by 2032, per Fortune Business Insights.
Magnachip may surpass its previous highs of $26 per share and higher, as the management reiterated growth estimates for the remainder of the year due to the introduction of new OLED DDIC products and strategic customer acquisitions. This one-of-a-kind opportunity allows investors to pick up a company that is selling slightly over its cash value in an industry primed for tremendous development, making it a potentially great time to make an investment.
YJ Kim, Magnachip’s Chief Executive Officer, commented,
“In Q1 we started the initial revenue ramp for OLED DDICs for the after-service market, and we were awarded two new designs targeted for a leading China smartphone OEM and also for a leading European EV maker. Our Power Analog Solutions (PAS) business revenue grew 12% sequentially driven by smartphones, e-motors, consumer appliances and server power applications, and we now are launching a slate of next-gen power products to help sustain our momentum. We also are encouraged that the power channel inventory showed signs of improvement in the first quarter.” “Looking forward, we expect sequential revenue growth in Mixed-Signal Solutions (MSS) and PAS to continue in Q2 and we reiterate our prior full-year guidance for double digit growth in both MSS and PAS businesses.”
While we acknowledge the potential of Best Semiconductor Penny Stocks To Buy, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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