Since the onset of the COVID-19 pandemic, supply chain bottlenecks have been a major hindrance for the semiconductor industry. The global chip shortage has been further…
exacerbated by increasing sanctions on Russia in response to its invasion of Ukraine. According to Pat Gelsinger, CEO of Intel, the semiconductor chip shortage will now drift into 2024. The primary reason is the unavailability of key manufacturing tools acting as a barrier to expanding the capacity levels required to meet the heightened demand.
Nevertheless, the growing consumption of consumer electronics and use of advanced technologies are expected to propel the industry’s growth. The semiconductor market is projected to reach $893.10 billion in 2029, growing at a 9.2% CAGR. Furthermore, the Semiconductor Industry Association (SIA) has urged Congress to work expeditiously to reach an agreement on the bill that allocates $52 billion to the CHIPS Act and provides an investment tax credit for domestic semiconductor manufacturing and design.
Given this backdrop, we think it could be wise to bet on quality semiconductor stocks ASE Technology Holding Co., Ltd. (ASX), Axcelis Technologies, Inc. (ACLS), ROHM Co., Ltd. (ROHCY), and Advanced Energy Industries, Inc. (AEIS), which are each currently trading at discounts to their peers.
Click here to checkout our Semiconductor Industry Report for 2022
ASE Technology Holding Co., Ltd. (ASX)
Headquartered in Kaohsiung, Taiwan, ASX provides a range of semiconductor packaging and testing and electronic manufacturing services worldwide. It offers packaging services, including flip-chip ball grid array (BGA), flip chip-scale package (CSP), advanced-scale packages, quad flat packages, low profile, thin quad flat packages, bump chip carriers, and other related services.
In terms of forward Price/Earnings, ASX is currently trading at 7.38x, which is 68.8% lower than the 23.63x industry average. Also, in terms of its forward Price/Sales, the stock is currently trading at 0.64x, which is 78.9% lower than the 3.05x industry average.
ASX’s net revenue increased 20.9% year-over-year to NT$144.39 billion ($4.89 billion) for the first quarter, ending March 31, 2022. Its operating income increased 47.7% from its year-ago value to NT$16.11 billion ($545.59 million), while its net income grew 52.3% to NT$12.91 billion ($437.03 million). Its EPS increased 52.1% year-over-year to NT$2.92.
The $0.21 consensus EPS estimate for the second quarter ended June 30, 2022, represents 31.1% year-over-year growth. Analysts expect its revenue to increase 12.1% year-over-year to $5.08 billion for the second quarter, ending June 30, 2022.
ASX’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock also has an A grade for Value. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #31 of 95 stocks.
To see additional POWR Ratings for Growth, Stability, Quality, Sentiment, and Momentum for ASX, click here.
Axcelis Technologies, Inc. (ACLS)
ACLS in Beverly, Mass., designs, manufactures, and services ion implantation and other processing equipment used to fabric semiconductor chips in the United States, Europe, and Asia. The company provides high energy, high current, and medium current implanters for several application requirements.
In terms of forward Price/Earnings, ACLS is currently trading at 13.57x, which is 42.6% lower than the 23.63x industry average. Also, in terms of its forward Price/Sales, the stock is currently trading at 2.21x, which is 27.3% lower than the 3.05x industry average.
During the fourth quarter, ending Dec.31, 2021, ACLS’ total revenue increased 68.3% year-over-year to $205.68 million. The income from operations grew 231% from its year-ago value to $46.58 million, while its net income improved 143.6% from its prior-year quarter to $35.75 million. The company’s EPS rose 144.2% year-over-year to $1.05.
Analysts expect ACLS’ revenue to increase 45.4% year-over-year to $193.12 million in the first quarter (ending March 31, 2022). The company’s EPS is expected to grow 101% year-over-year to $0.97 in the first quarter, ending March 31, 2022. In addition, it has an impressive earnings history, as it surpassed the consensus EPS estimate in all the trailing four quarters.
The stock has gained 34.9% in price over the past year and 45.3% over the past nine months.
ACLS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. ACLS is also rated an A grade for Growth and a B for Value and Sentiment. Within the Semiconductor & Wireless Chip industry, it is ranked #8.
In total, we rate ACLS on eight distinct levels. To see additional POWR Ratings for Momentum, Quality, and Stability for ACLS, click here.
ROHM Co., Ltd. (ROHCY)
Headquartered in Kyoto, Japan, ROHCY manufactures and sells electronic components worldwide. ICs, Discrete Semiconductor Devices, and Modules are the three operational segments. The company offers…
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