U.S. stocks climbed once again Thursday as Wall Street shakes off coronavirus fears, at least for now. There are plenty of reasons to be positive about the market, from strong quarterly earnings results from giants such as Apple AAPL and Microsoft MFST to better-than-expected job growth and more.
Corporate earnings growth is expected to return in 2020, after a hard to compare 2019, with tech set to play its part. And the historically cyclical semiconductor industry also looks poised to bounce back in 2020 after a down year in terms of sales and earnings.
Industry heavyweights Samsung SSNLF, Intel INTC, and Taiwan Semiconductor Manufacturing Co. TSM have already posted solid quarterly results and raised their outlooks.
With this in mind, we found three highly-ranked semiconductor stocks that recently topped earnings estimates that investors might want to consider buying right now…
STMicroelectronics N.V. STM
STMicroelectronics designs, develops, manufactures, and markets semiconductor integrated circuits and discrete devices. The firm is expected to expand within IoT, smart driving, the transition to 5G, and much more. STM easily topped our Q4 earnings estimate last month and its revenue popped 4% from the year-ago period.
Since then, analysts have raised their earnings estimates, which helps STM sport a Zacks Rank #1 (Strong Buy). STMicroelectronics also holds “B” grades for Growth and Momentum in our Style Scores system, pays a dividend, and has returned value to shareholders through buybacks.
Our Zacks estimates call for STMicroelectronics’ fiscal 2020 revenues to jump 12.3%, with 2021 projected to come in 9% higher to $11.7 billion. Meanwhile, its adjusted earnings are expected to surge 33% and 22%, respectively over this stretch. Plus, STM executives plan to invest $1.5 billion in CAPEX for 2020 to help it reach its longer-term growth goals.
STM shares have surged 90% in the past year and 26% in the last three months. And STMicroelectronics’ valuation is hardly stretch, as it trades roughly in-line with its industry’s average and the S&P 500 in terms of forward 12-month earnings.
Lam Research Corporation LRCX
Lam Research is a global supplier of wafer fabrication equipment and services for the semiconductor industry. LRCX surpassed our Q2 fiscal 2020 earnings and revenue estimates on January 29, with sales up 2.4%. The company’s earnings estimate revisions have also trended heavily upward since then. Lam Research’s Q3 consensus estimates have now surged 17% over the past 60 days, with Q4 up over 17%.
With this in mind, LRCX’s adjusted earnings are projected to surge 15.6% in 2020 and another 20% in fiscal 2021 to reach $20.12 a share. In terms of sales expansion, the firm’s quarterly revenue is projected to pop 15% in Q3 and 27.5% in the fourth quarter. Lam Research’s full-year sales are then expected to jump over 9%, with 2021 set to come in 12.6% higher at $11.86 billion.
Lam Research currently earns a Zacks Rank #2 (Buy) and holds an overall “B” VGM score. LRCX is also part of an industry that rests in the top 5% of our more than 250 Zacks industries. LRCX’s strong Value score is supported by the fact that it consistently trades at a discount compared to its industry. Meanwhile, its dividend yield of 1.41% comes in not too far below the 10-year U.S. Treasury note’s 1.6%.
LRCX shares have climbed roughly 8% since the firm posted its earing results late last month. The recent positivity is part of an industry-topping 85% climb in the last 12 months. Looking back, Lam Research stock is now up 315% in the last five years, which easily tops its industry’s 241% climb.
Power Integrations, Inc. POWI
Power Integrations is a semiconductor technologies firm that operates in the high-voltage power conversion space that is used in everything from LED lighting to renewable energy. POWI topped our Q4 earnings and revenue estimates at the end of January, which has helped its stock price climb to new highs. “Revenues grew 23% year-over-year in the fourth quarter driven by our continued success in rapid-charging for mobile devices and a return to growth in consumer appliances,” CEO Balu Balakrishnan said in prepared remarks.
POWI stock is now up over 56% in the past year to top its industry’s 37% average climb. The San Jose, California-based firm, with a $3.10 billion market cap, also raised its quarterly dividend by 12% in the third quarter and currently yields 0.73%.
Power Integrations’ post-release earnings revisions activity helps it earn a Zacks Rank #2 (Buy) at the moment. The stock also holds “A” grades for both Growth and Momentum to help it earn an overall “B” VGM score. And its Semiconductors – Power industry comes in at No. 4 out of 255 Zacks industries.
Peeking ahead, the company’s adjusted first and second quarter earnings are projected to climb 68% and 37.5%, respectively. This is set to help lift its full year earnings by over 23%, with the next year set to jump another 11%. Power Integrations’ bottom-line expansion is projected to be accompanied by 13% and 9.4% revenue growth.
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Apple Inc. (AAPL) : Free Stock Analysis Report
Samsung Electronics Co. (SSNLF) : Free Stock Analysis Report
Intel Corporation (INTC) : Free Stock Analysis Report
STMicroelectronics N.V. (STM) : Free Stock Analysis Report
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Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
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