In this piece, we’ll take a look at the 5 Best Semiconductor Stocks To Buy Now. For more such companies, go to 12 Best Semiconductor Stocks To Buy Now.
5. QUALCOMM Incorporated (NASDAQ:QCOM)
Forward P/E ratio as of December 15: 12.15
Number of Hedge Fund Holders: 80
QUALCOMM Incorporated (NASDAQ:QCOM) develops and licenses wireless technologies and chips for smartphones. The primary technologies covered by the company’s patents are CDMA and OFDMA, which are wireless communications protocols that form the basis of all 3G and 4G networks.
On November 15, 2022, Chris Caso, an analyst at Credit Suisse, started covering QUALCOMM Incorporated (NASDAQ:QCOM) with a price target of $150 and an Outperform rating on the stock. As per the analyst, QUALCOMM Incorporated (NASDAQ:QCOM) is well-positioned going ahead as compared with other chipmakers.
According to Insider Monkey’s database, 80 hedge funds held shares of the company at the end of the third quarter of 2022. Matrix Capital Management was the most bullish fund on the company’s stock at the end of Q3 2022.
Here is what ClearBridge Investments Large Cap Value Strategy has to say about QUALCOMM Incorporated (NASDAQ:QCOM) in its Q4 2021 investor letter:
Market strength continued in the fourth quarter, with only the communication services sector down in the Russell 1000 Value Index. Portfolio returns benefited from the strong performance of semiconductor maker Qualcomm, which has executed exceptionally well in pursuing the transition to 5G, growing both content and share due to its leadership position in cellular technology. The chipmaker recently outlined a number of peripheral growth opportunities outside of mobile markets, including automotive (where it hopes to leverage its strong presence in the automotive infotainment space into advanced driver assistance systems), Internet of Things (including opportunities in the PC market, VR/AR market, and factory automation) and radio frequency (where mmWave adoption globally, including China, would drive substantial upside).
4. STMicroelectronics N.V. (NYSE:STM)
Forward P/E ratio as of December 15: 9.78
Number of Hedge Fund Holders: 19
STMicroelectronics N.V. (NYSE:STM) is a leading firm in the semiconductor space, and its products include analog chips, microcontrollers, discrete power semiconductors, and sensors. The company is also among the well-known chip suppliers to the automotive and industrial sectors.
On December 12, 2022, Christopher Rolland, an analyst at Susquehanna, started covering STMicroelectronics N.V. (NYSE:STM) with a price target of $50 and a Positive rating on the stock. The company’s Q3 2022 revenue was reported at $4.31 billion, beating market expectations by $69.31 million. The Normalized EPS of the company stood at $1.16, beating analysts’ estimates by $0.12 in the third quarter.
As per Insider Monkey’s proprietary database, 19 hedge funds were bullish on STMicroelectronics N.V. (NYSE:STM), as of the end of the third quarter. Millennium Management was the biggest stakeholder in the company’s stock at the end of Q3 2022.
Here is what Saturna Capital has to say about STMicroelectronics N.V. (NYSE:STM) in its Q3 2021 investor letter:
STMicroelectronics has a goal of becoming carbon neutral by 2027, and in 2020 reported that their greenhouse gas emissions were down 19% over the previous year. In 2020, STMicroelectronics was the only semiconductor company with targets approved by the Science Based Targets Initiative for limiting warming to 1.5 degrees Celsius, and their 2027 net-zero goal is recognized as one of the most ambitious in the industry. As greenwashing presents a growing concern within the ESG community, and as more and more funds engage in re-branding exercises that have little to do with pursuing sustainable investment practices among others, our definition of sustainability includes financial sustainability, most often demonstrated by intelligent capital allocation leading to solid cash flows that can sustain a business without resorting to excessive leverage.
3. Skyworks Solutions, Inc. (NASDAQ:SWKS)
Forward P/E ratio as of December 15: 9.14
Number of Hedge Fund Holders: 39
Skyworks Solutions, Inc. (NASDAQ:SWKS) is a chipmaker with its main products being power amplifiers, switches, filters, and integrated front-end modules that support wireless transmissions. Skyworks Solutions, Inc. (NASDAQ:SWKS)’s biggest clients include smartphone manufacturers, although the company is also growing in the non-handset markets as well.
On November 15, 2022, Chris Caso, an analyst at Credit Suisse, initiated coverage of Skyworks Solutions, Inc. (NASDAQ:SWKS) with a price target of $125 and an Outperform rating on the stock. The analyst believes that we are close to the bottom of the down cycle, and there is potential for growth from the current price level.
According to Insider Monkey’s database, 39 hedge funds held stakes in Skyworks Solutions, Inc. (NASDAQ:SWKS) at the end of the third quarter ending September 2022. Millennium Management remained the leading stakeholder in the company at the end of Q3 2022.
Heartland Advisors, which owns 119,628 shares of Skyworks Solutions, Inc. (NASDAQ:SWKS) as of June 30, discussed how cheap the stock has become in its Q3 2022 investor letter:
Before the risk-on rebound early in the quarter, we were searching for opportunities to shift from our defensive stance, looking for beaten-down, high-quality “early cycle” leaders. Existing holding, Skyworks Solutions, Inc. (NASDAQ:SWKS), represents one such opportunity that was added to on weakness.
Skyworks is one of two leading providers of radio frequency system components to smartphone makers and electronics manufacturers. With every step-up in product complexity, over the past two decades, the competitive landscape has shrunk while gross margins have increased significantly. 5G represents another such step-up, which is likely to increase how much Skyworks can make per smartphone.
Apple is a big customer, accounting for more than half of Skyworks’ sales. That customer concentration has depressed Skyworks’ valuation over time. More recently, fears surrounding a global recession and risk to consumer demand have further pressured valuation. However, the handset business is expected to benefit from 5G content, which may help offset some macroeconomic pressures. Away from the handset business, Skyworks’ growth is expected to accelerate thanks to other secular drivers such as WIFI 6 and growth of the industrial internet (i.e., “Internet of Things”).
At a P/E of less than eight and a 2.3% dividend yield, SWKS rarely gets this cheap, making this high-quality stock compelling for longterm investors.
2. United Microelectronics Corporation (NYSE:UMC)
Forward P/E ratio as of December 15: 8.98
Number of Hedge Fund Holders: 17
United Microelectronics Corporation (NYSE:UMC) was founded in 1980 and is the third-largest chip foundry globally, with a 7% market share in 2021. The company runs 12 fabs in Taiwan, Japan, Singapore, and Mainland China, with additional sales offices in the United States, Europe, and South Korea.
On September 14, 2022, Rick Hsu, an analyst at Daiwa, increased his price target on United Microelectronics Corporation (NYSE:UMC) to NT$46 from NT$43. The analyst believes that the company’s structural profitability should increase even after accounting for price erosion in light of the present inventory correction.
As per Insider Monkey’s database, 17 hedge funds had stakes in United Microelectronics Corporation (NYSE:UMC) at the end of the third quarter. Arrowstreet Capital remained the leading stakeholder in the company at the end of Q3 2022.
1. ASE Technology Holding Co., Ltd. (NYSE:ASX)
Forward P/E ratio as of December 15: 8.45
Number of Hedge Fund Holders: 10
Headquartered in Kaohsiung, Taiwan, ASE Technology Holding Co., Ltd. (NYSE:ASX) provides semiconductor assembling and test manufacturing services. The company’s operations are divided into Packaging, Testing, and Electronic Manufacturing Services, out of which packaging is the most revenue-generating segment. Almost half of the company’s total revenue comes from sales in the United States.
On October 28, 2022, ASE Technology Holding Co., Ltd. (NYSE:ASX) reported results for Q3 2022, reporting revenue of $5.88 billion, up 8.5% YoY. The company’s Normalized EPS of $0.26, beat the market estimates by $0.02. ASE Technology Holding Co., Ltd. (NYSE:ASX) is a strong dividend-paying company providing a current dividend yield (ttm) of 11.60%.
10 hedge funds were long on the company’s stock at the end of the third quarter, according to Insider Monkey’s database. Fisher Asset Management had the biggest long position in the company at the end of Q3 2022.
You can also take a look at 10 Best December Dividend Stocks To Buy and 15 Most Trusted Companies in the World.
