Source: Zhitong Finance
The NASDAQ Composite is up 21.17% so far this year, with Apple, Microsoft, Google, Tesla and NVIDIA being the top 5 companies with the highest returns this year; excluding the top 5 contributors, the NASDAQ index is up just 5.79% this year.
With the emergence of the new Omicron strain, the market's concerns have risen. As we saw on Black Friday, uncertainty could lead to a sell-off for investors. It's worth noting that not all tech giants are doing well. Some big tech companies with poor fundamentals have fallen more than 40 percent in just a few weeks. Take DocuSign (DOCU.US), which has been hyped during the pandemic, but they lack solid fundamentals.
While the performance of large tech companies is well known, there are also some valuable tech stocks to watch out for — stocks that have both outpaced the S&P 500 and NASDAQ so far this year.
Those stocks with good fundamentals and metrics offer investors buying opportunities, including Synaptics (SYNA.US), MaxLinear (MXL.US), Ameson Semiconductor (ON Semiconductor), HP and Calix (CALX.US). With semiconductors still ahead of the broader market in the face of supply constraints, Seeking Alpha's head of quantitative strategy, Steven Cress, expects semiconductors to continue to outperform the broader market, which is why 3 of the 5 stocks he chose are focused on the space.
Synaptics
Synaptics is a leading global design and manufacturing company for the development of human-machine interface interaction solutions for mobile computing, communications and entertainment devices, and supplies a number of technologies including as-applied integrated circuits, firmware, software, pattern recognition and haptic technology.
Second, Synaptics announced this month its immediate acquisition of DSP Group, a provider of communications voice and wireless chipset solutions. Acquiring a DSP is a smart move in the long run. Michael Hurlston, President and CEO of Synaptics, said: "DSP Group's capabilities in SmartVoice and low-power artificial intelligence are aligned with our long-term vision of embedding more intelligence in connected devices at the edge of the network. In addition, the addition of ULE wireless technology and VOIP processing solutions from DSP Group enhances our cross-sell capabilities and provides differentiated solutions for our consolidated customer base. ”
When the P/E ratio is combined with growth rates, its valuation indicators are attractive. In addition, the company's expected price-to-earnings ratio is 26 times, which is only 4% higher than the industry and will continue to show an upward trend. In addition, Synaptics has good profitability and stable growth capabilities.
On the financial side, over the past 90 days, analysts have given 11 upward revisions and zero downward revisions to Synaptics' performance expectations. Synaptics, with a revised rating of A+, earned more than expected in its fiscal first quarter, and its record margins pushed its stock up 7 percent after reporting revenue and profit. The company's GAAP and Non-GAAP gross margins for the fiscal first quarter reached record highs of 53.2 percent and 58.0 percent, respectively. Earnings per share were $2.68, $0.07 higher than the previous year; revenue was $373 million, up 13.49% year-over-year. Michael Hurlston, president and CEO of Synaptics, said on the third-quarter earnings call: "Synaptics started strongly in fiscal 2022, with first-quarter revenue above the midpoint of the guidance range, Non-GAAP gross margins reaching the highest level in the company's history, and Non-GAAP operating margins setting new highs. ”
MaxLinear
MaxLinear is an American hardware company dedicated to improving the world's communications networks through RF, analog, digital, and augmented broadband communications applications. Due to its high ratings for factors in terms of growth, profitability, momentum and corrections, Cress believes MaxLinear is an excellent technology stock.
MaxLinear's stock price has risen more than 94 percent this year, taking advantage of the work-from-home boom. Seeking Alpha author Stephen Simpson wrote: "The record growth of broadband subscribers in 2020 has driven strong demand for MaxLinear front-end and connectivity solutions, while the acquisition of Intel's home gateway business is progressing exceptionally well. ”
Simpson further wrote: "MaxLinear's WiFi 6 and WiFi 6E are becoming true growth engines for the business, while content revenue from in-house devices is driving revenue. MaxLinear's third-quarter net revenue was $229.8 million, up nearly 47 percent year-over-year; MaxLinear's third-quarter GAAP gross margin was 56.5 percent and Non-GAAP's gross margin was 61.3 percent. MaxLinear's stock price has risen more than 127% this year. In the past 90 days, 11 analysts have raised their estimates.
Ameson Semiconductor
As a Fortune 1000 company, AXON Semiconductor is a U.S. semiconductor supplier whose product portfolio includes power and signal management, logic, discrete, and custom devices that help customers solve their unique design challenges in automotive, communications, computer, consumer electronics, industrial, LED lighting, medical, military/aerospace, and power supply applications fast and cost-effective.
Citi analyst Christopher Danely said: "With January's earnings season approaching and now is the prime time for investors to buy semiconductor stocks, the shortage in the chip industry does not seem to improve any time soon. Danely noted that the semiconductor industry has never been so strong since 1999 and 2000, with orders from "many" businesses continuing into 2022.
Ameson's valuation is more than 7.5% attractive relative to its industry, with a forward price-to-earnings ratio of 23.03 times. Although supply constraints have created some problems for the semiconductor industry, Ameson Semiconductor will continue to move forward, as its growth shows.
So far this year, Ameson Semiconductor's stock price has risen by more than 96%. Ameson Semiconductor's results have outpaced expectations over the past six quarters, while analysts continue to raise their earnings forecasts. The stock continued to climb after recently posting a windfall of 17.6 percent above expectations. Within 90 days, the company's consistent forecast for earnings per share was revised 26 times upwards and 0 times downwards.
Ameson Semiconductor CFO Thad Trent said on the third-quarter results call: "I am pleased to announce that this is yet another record quarterly result... Record quarterly revenue, record non-GAAP operating margin and earnings per share, while generating a 20% free cash flow margin. All three of our business units reported record quarterly revenues, and our target automotive and industrial end markets grew sequentially, achieving record revenue levels. ”
If at this rate, the company continues to maintain its expected pace to achieve the guidance for the fourth quarter, and its earnings per share will increase by 229.4% year-on-year. Ameson Semiconductor has strong momentum and attractive price returns, with a 10-year price-to-value return of more than 700%. An in-depth study of Ameson Semiconductor reveals that its EBITDA growth rating was stronger than the same period last year, 131% higher than the industry, and the EPS FWD long-term rating was 208% higher than the industry.
Hp
HP was a multinational information technology company that developed one of the first computers. Today, HP continues to offer compute and other devices, with a focus on cloud-based solutions to help change the way people connect and operate. The stock is also one of the few high-dividend stocks in the IT industry. The company pays dividends continuously for a long period of time, which indicates its steady returns to shareholders.
Hp has a strong reputation and value. Compared to other tech companies, the company's valuation is ultra-low, with a forward price-earnings ratio of 8.8 times, nearly 65% lower than the industry, and the price-to-earnings ratio relative to earnings growth ratio (PEG) is more than 80% lower than the industry value, making this stock very attractive. With an attractive valuation, a dividend yield of 2.72%, and an attractive overall dividend, the company has nothing to criticize.
When we consider HP's overall factor hierarchy and growth potential, it's clear that HP is already taking advantage of the current environment. SA author Paul Franke said: "HP has performed even better for investors over the past year and is the biggest winner for momentum-based big tech companies in 2021. During the pandemic, the demand for computers and printers for working/going from home has surged, which is the main reason for the stock's rise in business demand. ”
During the pandemic, HP benefited from becoming a strong competitor and improving supply chain solutions. After HP's fourth-quarter earnings report, HP shares surged 8 percent to an intraday high of $38.19 after the company reported more than expected earnings and said its sales continued to grow.
After HP announced its fourth-quarter results on November 23, 2021, the stock price hit its highest value in 52 weeks. Earnings per share were $0.94, an up-to-expectation of $0.06, and revenue of $16.68 billion, up 9.29% year-over-year, outpacing expectations of $1.25 billion. Over the past 90 days, HP's consensus forecast for EARNINGS per share has been revised upwards 17 times, while the number of downward revisions has been 0.
And Marie Myers, HP's chief financial officer, said on a fourth-quarter earnings call: "Looking ahead to fiscal 22, we expect to continue to repurchase shares at a high price of at least $4 billion." Our share repurchase program, coupled with the recently increased annual dividend of $1 per share, puts us on track to exceed the $16 billion capital return target set in our value creation program. ”
Calix
Calix is primarily about enabling customers to streamline business processes through the use of its cloud computing, software, and communications services. Driven by the adoption and growth of remote work, education, and hybrid environments, Calix is in high demand. Seeking Alpha by Justin J. Lee said: "I believe Calix offers a great investment opportunity for growth investors as their client base and revenue are growing rapidly, and I expect this trend to continue." Second, operating cash flow is improving rapidly as a reflection of revenue growth and balance sheets are becoming stronger. Finally, their profit margins have been improving, although supply chain issues could challenge them by 2022. ”
Over the past six months, the company's stock price has risen nearly 50 percent. Earnings per share for the third quarter were $0.35, $0.07 higher than expected, and revenue was $172 million, up 14.43% year-over-year, beating expectations of $4.55 million. In addition, Calix's RETURN on equity is also very high, nearly 4500% higher than the entire industry – very impressive.
Conclusion: Sleeping tech stocks can also make money
Tech stocks are great to buy, especially if you can find stocks that are reasonably valued, have good fundamentals, and can capitalize on their growth and momentum. In the current environment, these stock options all offer a good balance of growth and value, and given that related industries are evolving and changing our way of life, this is a good time to diversify our portfolios and hitch a ride on digital and semiconductors.