Once considered to be a cash cow for investors, finding semiconductor stocks to buy and hold can be daunting these days.
The iShares Semiconductor ETF (NASDAQ:SOXX), an exchange-traded fund that holds 30 leading semiconductor stocks, fell more than 35% in the last 12 months and a semiconductor chip shortage continues could continue into 2024.
But if you’re a believer in technology and realize that semiconductors will continue to be in high demand, such a drop is pretty interesting for long-term investors. Other names are immune to the headwinds facing the chip industry and still have more room to run higher.
Washington seems to be doing its part to help ease the shortage. The CHIPS and Science Act, passed by Congress and signed into law in 2022, is designed to increase semiconductor research and production in the U.S.
Companies are making plans to expand their manufacturing bases in the U.S. and President Joe Biden has toured semiconductor factories that he hopes will give the U.S. economy a needed boost.
Where does that leave us? It’s time to go bargain shopping for semiconductor stocks to buy and hold.
The Portfolio Grader can be a great tool to help us find the best semiconductor stocks to buy now. The Portfolio Grader is my free tool that evaluates and grades stocks based on qualitative metrics and buying momentum.
Here are seven great picks in the semiconductor space, according to the Portfolio Grader ratings.
| AMKR | Amkor Technology | $26.10 |
| ARRY | Array Technologies | $18.41 |
| AVGO | Broadcom | $554.68 |
| FSLR | First Solar | $145.49 |
| ON | ON Semiconductor | $63.06 |
| SPWR | SunPower | $16.83 |
| ENPH | Enphase Energy | $246.51 |
Amkor Technology (AMKR)
Amkor Technology (NASDAQ:AMKR) packages and tests integrated circuits for chip manufacturers.
The company has a pretty big footprint outside of its home base in Arizona, with factories also in China, Japan, South Korea, Malaysia, the Philippines, Portugal and Taiwan.
Although it has faced some challenges this year – the company’s operations in Shanghai were hurt by China’s extended Covid-19 shutdown – but the stock has rallied in the second half of the year, up 66% since in the last six months.
Third-quarter earnings of $2.08 billion and EPS of $1.25 per share easily beat analysts’ expectations and showed strong year-over-year growth (revenue was up 24% from a year ago, with net income of $306.1 million, an increase of 69%).
Amkor is also one of the cheaper stocks you’ll find these days, with a price-earnings ratio of only 7.7. It has an “A” rating in the Portfolio Grader.
Array Technologies (ARRY)
Array Technologies (NASDAQ:ARRY) is one of the most promising semiconductor stocks to buy and hold. It manufactures solar trackers and software that allows its customers to maximize solar energy production.
That’s been a good business for Array this year. The company’s third-quarter earnings of $515.02 million was an increase of 172.95% from a year ago. Net income of $40.82 million was up nearly 250% from the same quarter last year.
Array had no problems at all topping earnings estimates in Q3, coming in 30% higher than revenue expectations of $515.02 million. Earnings per share of 18 cents was better than the 10 cents EPS that analysts expected.
Wells Fargo analyst Michael Blum initiated coverage of ARRY stock with an “overweight” rating and a price target of $28, which represents a 38% upside.
Array stock is up 71% in the last six months and currently has an “A” rating in the Portfolio Grader.
Broadcom (AVGO)
I’m a big fan of Broadcom (NASDAQ:AVGO) stock because of its position in the 5G space.
Broadcom designs and develops semiconductors for the wireless and broadband communication industry.
That’s a great opportunity for investors because I’ve long been convinced that the applications of 5G could be life-changing. The ability to get lightning-quick internet speeds even when on Wi-Fi opens the doors for smart cities, machine learning, AI, virtual reality, and more.
Broadcom is also buying enterprise software company VMWare (NYSE:VMW) in a $61 billion deal that will allow it to expand into cloud computing. U.S. and European regulators are looking into the deal.
Q4 revenue of $8.93 billion was 20.5% better than a year ago and topped analysts’ expectations for $8.9 billion. Its earnings per share of $10.45 was better than expectations for $10.28.
AVGO stock is up 17% in the last six months and has a “B” rating in the Portfolio Grader.
First Solar (FSLR)
When you think about First Solar (NASDAQ:FSLR), you probably think first about solar power and not semiconductor stocks to buy and hold. That’s perfectly reasonable. FSLR is one of the most well-known solar stocks out there.
It’s also one of the best-performing stocks in recent months. In the last six months, FSLR stock is up by more than 110%, with plenty of reasons to think the trend will continue.
The company announced that it will invest up to $1.2 billion to scale production of photovoltaic (PV) solar modules, which could allow it to increase its power capabilities by more than 10 gigawatts by 2025.
The company says each of those modules features a layer of Cadmium Telluride semiconductor that’s thinner than a human hair. And it’s researching more ways to make products with an even thinner semiconductor layer.
Daiwa analyst Jonathan Kees initiated coverage of First Solar stock with an “outperform” rating and set a price target at $175, indicating a potential upside of another 19%.
FSLR stock has a “B” rating in the Portfolio Grader.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON) had a solid second half of 2022, rising more than 35% in the last six months. ON Semiconductor makes chips that are used in automotive, communications, computing, consumer, industrial, lighting, medical and military applications. That’s a great place to be in as companies are clamoring for semiconductors and the CHIPS Act makes buying semiconductors from U.S. companies easier.
Earnings in the third quarter continued the company’s winning ways – revenue of $2.19 billion beat analysts’ expectations for $2.12 billion. EPS of $1.45 per share was better than the $1.31 the Street expected.
ON is attractively priced, with a reasonable price-earnings ratio of 16.2. It currently has a “B” rating in the Portfolio Grader.
SunPower (SPWR)
SunPower (NASDAQ:SPWR) provides PV solar generation systems and battery energy storage products for residential customers.
The stock had an up-and-down 2022, rising as high as 30% and falling as low as 36%. The stock dropped 28% in December to fall into the red for the year, posting a loss of 16%.
But there’s plenty of reason for optimism. In addition to getting a boost from the CHIPS Act, SunPower is expected to profit from the European Union’s mandate on solar panels for all new homes in buildings, starting in 2030.
In the third quarter, SPWR reported $475.71 million in revenue, beating expectations of $427.67 million. That was also nearly 68% better than the company’s revenue from a year ago.
EPS also was a pleasant surprise, coming in at 13 cents per share versus expectations of 8 cents.
SPWR stock has a “B” rating in the Portfolio Grader.
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH) is a manufacturer of solar energy inverters and battery storage products. It actually has some pretty interesting technology that should help customers deal with rolling blackouts or other service disruptions.
The company installs microinverters in a customer’s home. The microinverter stores power on a battery, which the customer can then use if their power fails. It also has a smartphone app that the customer can use to see how much power they’ve stored and to direct power to specific appliances when needed.
The company is growing quickly and turning a profit. Revenue in the third quarter was $634.7 million – up more than 80% on a year-over-year basis. EPS of $1.25 was better than the $1.09 that analysts expected.
Enphase is currently hitting all the marks, up 28% over the last six months. It has an “A” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had a long position in ON, AMKR, ENPH and AVGO. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.