Although COVID-19 lockdowns in Malaysia have exacerbated the global chip shortage, governments’ initiatives worldwide to keep critical factories up and running and address supply chain vulnerabilities bode…
well for semiconductor manufacturers. With chip suppliers reallocating capital and increasing supply to the automotive and electronics markets, the shortage is expected to reduce gradually. According to the World Semiconductors Trade Statistics, the worldwide semiconductor market is expected to grow by 25.1% in 2021.
Investors’ confidence in the semiconductor industry is evident from the iShares Semiconductor ETF’s (SOXX) 59.8% return over the past year. The global semiconductor market is expected to reach $778 billion by 2026, registering a CAGR of 7.7%.
Therefore, we think it could be wise to bet on quality large-cap semiconductor stocks such as Broadcom Inc. (AVGO – Get Rating), STMicroelectronics N.V. (STM – Get Rating), United Microelectronics Corporation (UMC – Get Rating), and Qorvo, Inc. (QRVO – Get Rating). They are expected to deliver substantial returns in the near term based on their market dominance, consistent innovations, and diverse portfolio.
Broadcom Inc. (AVGO – Get Rating)
AVGO is a global technology company that focuses on semiconductor and infrastructure software solutions. Its product offerings serve the data center, networking, software, broadband, wireless, storage, and industrial markets. The company has a market capitalization of $207.8 billion.
This month, AVGO launched the world’s lowest power L1/L5 GNSS receiver chip with GNSS innovations, the BCM4778, optimized for mobile and wearable applications. This third-generation chip should enable the company to maintain its tradition of raising the bar for mobile GNSS and allow its customers to experience 35% smaller and 5% less power consumption features.
AVGO’s net revenue for the fiscal third quarter that ended August 1, 2021, increased 16.4% year-over-year to $6.78 billion. The company’s net income grew 28.3% from the year-ago value to $3.12 billion. Its EPS rose 28.9% from the prior-year quarter to $6.96. Also, the company’s cash flow increased 11.4% from the year-ago value to $3.54 billion.
Analysts expect AVGO’s revenue to increase 14.7% year-over-year to $27.4 billion in the fiscal year 2021. Also, the company has an impressive earnings surprising history; it surpassed the consensus EPS estimates in each of the trailing four quarters. In addition, its EPS is expected to increase 26% in the current year. Moreover, the stock has gained 17% over the past nine months and 41.5% over the past year.
AVGO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, which equates to a Strong Buy rating in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has a B grade for Momentum, Growth, and Quality. We’ve also graded AVGO for Sentiment, Stability, and Value. Click here to access all of AVGO’s grades. AVGO is ranked #2 out of 97 stocks in the B-rated Semiconductor & Wireless Chip industry.
Click here to check out our Semiconductor Industry Report for 2021
STMicroelectronics N.V. (STM – Get Rating)
Headquartered in Geneva, Switzerland, STM is a microelectronics and semiconductor chip manufacturer with a market capitalization of $42.14 billion. The company operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. STM also offers products such as Data Converters, Audio ICs, and also many other solutions.
This month, STM collaborated with Paco Rabanne to introduce a new “Phantom” fragrance for men. This fragrance is packed in a bottle that is connected to an embedded NFC, using a contactless technology supported by smartphones to connect to its online “Phantom Universe.” Through this innovative approach…
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