The semiconductor sector was one of the best performing stock groups of 2021, on the wave of a & # 39; perfect storm & # 39; – Explosive consumer demand for computer and mobile equipment in the past year, as a result of the crash of the corona virus and a total shortage of chips worldwide. , which has led to a massive increase in equipment expenditure to meet increased demand.
Not surprisingly, the industry's two leading ETFs, VanEck Vectors Semiconductor ETF (NYSE 🙂 and the iShares Philadelphia Semiconductor Index (), are up about 12% this year, outperforming both the as the.
SMH SOX S&P & NASDAQ Graph
While heavyweights like NVIDIA (NASDAQ :), Intel (NASDAQ :), Advanced Micro Devices (NASDAQ 🙂 and Qualcomm (NASDAQ 🙂 are getting the most attention, there are several other semiconductor-related stocks worth considering over the regular names.
As such, the three stocks below should continue to perform well in the coming months, given their growing dominance in the industry, and there are no signs of a decline in demand for their products in the near term.
1. Materials used
Performance year-to-date: + 59.3%
Market Cap: $ 126.2 Billion
Applied Materials (NASDAQ 🙂 is a leading provider of manufacturing equipment, services and software to the semiconductor industry. The Santa Clara, California-based company thrived this year, reaping the benefits of soaring demand amid the global semiconductor shortage.
Year-to-date, Applied has seen its stock increase by about 59%. Even more impressive, the chip equipment supplier's stock has rallied by about 153% over the past 12 months, far outstripping the comparable returns of the broader market.
AMAT stock closed at $ 137.50 on Tuesday, ahead of its all-time high of $ 145.66 on April 5, bringing the semiconductor equipment manufacturer to a market capitalization of $ 126.2 billion.
Applied Materials reported last week, shattering expectations for both revenues and revenues for the fourth consecutive quarter amid broad base in the global semiconductor industry.
The chip equipment vendor posted earnings per share of $ 1.63 for the fiscal second quarter of 2021, easily exceeding forecasts for earnings of $ 1.51 per share and improving 83% over earnings per share of $ 0.89 in the same quarter a year earlier. Sales were up nearly 41% year-over-year to $ 5.58 billion, which was higher than the estimated $ 5.4 billion.
That was the company's best profit and sales growth in four years.
For the current quarter, Applied Materials forecasts earnings of $ 1.76 per share on revenues of $ 5.92 billion, based on the mid-outlook. If confirmed, that would mean a year-over-year growth of 66% in revenues and 35% in sales.
"We are confident that we can outperform our markets as major, secular trends create sustainable demand for semiconductors and our materials technology leadership becomes increasingly important to deliver new chip technologies," said the company in its profit statement.
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2. ASML Holding (AS 🙂
Year-to-date performance: + 37.8%
Market Cap: $ 279.5 Billion
ASML Holding (NASDAQ 🙂 is a Dutch multinational company specializing in the development and manufacture of photolithography systems primarily used for the production of integrated circuits.
The chip equipment manufacturer based in Veldhoven, the Netherlands, which includes companies such as Intel, Taiwan Semiconductor Manufacturing (NYSE 🙂 and Samsung Electronics (OTC 🙂 among its high profile customers, is currently the world's largest supplier of photolithography systems for the semiconductor industry.
Stocks of the semiconductor equipment supplier have been booming since the start of the year, rising nearly 38% in 2021. Year over year, stocks are up 110%, supported by increased capital expenditures from global chip makers.
ASML shares rose to a new all-time high of $ 679.08 yesterday before closing the session at $ 672.29, giving the largecap company a valuation of $ 279.5 billion.
ASML's revenues and earnings, as published on April 21, showed a tremendous improvement over the same period a year ago.
Earnings per share increased more than 300% from the same quarter a year earlier to $ 3.86, while sales more than doubled to $ 5.25 billion. Analysts had expected the company – which has delivered double-digit growth in earnings and sales in four consecutive quarters – to report first-quarter earnings per share of $ 3.07 on sales of $ 4.81 billion.
As explained by CEO Peter Wennink about the profit call:
"We are seeing a significant increase in demand from our customers in all market segments compared to three months ago and expect another very strong year with demand across our entire product portfolio."
ASML strengthened its outlook for the remainder of the year and said it now expects revenue growth of approximately 30% by fiscal 2021. Earlier, it said it expected to achieve "double-digit" growth for the year.
"Building the digital infrastructure with secular growth drivers such as 5G, AI and high-performance computing solutions is fueling the demand for advanced and mature nodes in logic (chips) and memory," the company said in its profit statement.
3. Lam Research
Performance since the beginning of the year: + 35.6%
Market Cap: $ 91.3 Billion
Lam Research (NASDAQ 🙂 is a global provider of wafer making equipment and services to the semiconductor industry. The products are designed for use in a range of electronic devices including mobile phones, computers, tablets and network equipment.
Shares of the Fremont, California-based company are up more than 35% since the beginning of the year, benefiting from higher sales volumes for its chip making equipment amid the global shortage and increased demand as result of the COVID-19 work / learning from home disabilities.
LRCX shares – which are up about 145% in the past 12 months – settled at $ 640.37 last night, not far from the record high of $ 669.00 reached on April 8. At the current level, the semiconductor processing equipment manufacturer has a market. limit of $ 91.3 billion.
Lam reported strong fiscal profit and sales growth when it released its latest results on April 21, largely due to the continued increase in semiconductor equipment spending.
Earnings per share increased 88% from the same period last year to $ 7.49, far ahead of expectations for earnings per share of $ 6.62. Sales, meanwhile, were up 54% year-on-year to $ 3.85 billion, which was higher than estimated sales of $ 3.72 billion.
That was the sixth consecutive quarter of accelerated growth in revenues and sales.
"Lam & # 39; s growth trajectory continues with record sales and earnings per share in the March quarter," said Tim Archer, Lam Research's president and CEO.
In addition to those encouraging numbers, Lam's management sounded optimistic about his outlook for the last quarter of his fiscal year, supported by a strong wafer-making spending environment.
For the current quarter ending June 27, Lam expects an adjusted $ 7.50 per share on revenue of $ 4.0 billion, earning consensus expectations for earnings per share of $ 6.78 and easily exceeds sales of $ 3.72 billion.
