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The future looks bright for the semiconductor industry, despite the significant setback from the previous year. We also think quality chip stocks Analog Devices (ADI), Camtech (CAMT) and Intest (INTT) may be worth buying given the government’s efforts. read.
Despite the short-term downturn, the semiconductor industry’s long-term growth prospects remain bright. Semiconductor sales declined in Q1 2023, but 0.3% increase in March 2023 compared to February 2023was the first month-on-month increase in a year, giving optimism about the recovery.
Investors can therefore focus on quality chip stocks. Analog Devices, Inc. (ADI), Kamtec Co., Ltd. (kamut), Intest Co., Ltd. (point).
Governments around the world are investing heavily to build self-sufficiency in the semiconductor and electronics supply chains. announced by the Biden Harris administration. First CHIPS for America Grant We created this opportunity earlier this year to revitalize the American semiconductor industry.
In addition, the Biden administration made a new proposal. 25% investment tax credit For US semiconductor production.The global semiconductor market is expected to grow rapidly 13.1% CAGR Until 2032.
Investor interest in chip stocks is fueled by the VanEck Vectors Semiconductor ETF (SMH) generated 20% revenue in the last 6 months.
Let’s dig deeper into the fundamentals of the above stocks.
Analog Devices, Inc. (ADI)
Analog Devices designs, manufactures, tests and markets integrated circuits (ICs), software and subsystems utilizing analog, mixed-signal and digital signal processing technologies.
In terms of futures price/earnings ratio, the ADI is trading at 2.62, 29.8% below the industry average of 3.74. Additionally, ADI’s future EV/EBIT of 15.89x is 9.1% lower than the industry average of 17.47x.
ADI’s 12-month ROTA of 4.57% is well above the industry average of 0.26%. Our ROCE over the last 12 months was 44.88%, well above the industry average of 0.71%.
ADI revenues for the first quarter of the fiscal year ended January 28, 2023 were $3.25 billion, up 21.1% year-over-year. Adjusted operating income increased 35.1% year-over-year to $1.66 billion.Also, that EPS It was $2.75, up 41.8% from the previous year.
Consensus revenue forecast for the year ending October 2023 is $12.72 billion, representing a 5.9% year-over-year increase. EPS for the same period is expected to rise 12.6% year-on-year to $10.78. Exceeded EPS expectations in all four subsequent quarters.
ADI’s stock has surged 17.8% over the past year to close at $191.31.
ADI’s power rating reflects this promising outlook. This stock has an overall rating of B, which corresponds to a ‘Buy’ on our proprietary rating system. POWR Ratings values stocks by 118 different factors, each with its own weighting.
ADI also received a B grade for Momentum, Sentiment and Quality. Ranked 25th out of 90 stocks. Semiconductor & wireless chip industry. click here Additional POWR assessments of ADI’s value, stability and growth can be found here.
Kamtec Co., Ltd. (kamut)
Headquartered in Migdal Haemek, Israel, CAMT develops, manufactures and markets inspection and measurement equipment. The company serves a variety of semiconductor industry segments and sells products throughout Asia Pacific, the United States and Europe.
CAMT’s future EV/EBIT multiple is 13.48, 28.3% lower than the industry average of 18.79. The company’s non-GAAP forward P/E ratio is 16.64x, 20.6% lower than the industry average of 20.95x.
CAMT’s 12-month ROCE of 21.92% is well above the industry average of 0.72%. ROTA over the last 12 months is 11.53%, well above the industry average of 0.31%.
CAMT’s total liquid assets were $561.57 million for the period ended March 31, 2023, compared with $556.96 million for the period ended December 31, 2022. Additionally, current liabilities were $74.45 million, compared with $88.5 million for the period ended December 31, 2022. same period.
Analysts expect CAMT’s revenue to grow 10.8% year-on-year to $323.53 million in 2024. EPS is expected to grow 10.5% to $1.86 in 2024. All four subsequent quarters exceeded EPS expectations. Shares have surged 18.9% over the past six months to close at $27.96.
It’s no surprise that CAMT has an overall B rating, which equates to a “buy” in the POWR rating system. A grade for momentum, B grade for stability and quality. It ranks 27th in the industry.
In addition to the above, we also evaluated CAMT on sentiment, value, and growth. Get all CAMT ratings here.
Intest Co., Ltd. (point)
INTT provides test and process solutions for manufacturing and testing in the automotive, defense/aerospace, industrial, life sciences, security, and semiconductor markets worldwide. The company operates through his three segments. environmental technology; and process technology.
On April 18, 2023, INTT announced that its wholly-owned subsidiary, inTEST Thermal Solutions, has become a distributor of Stellar Scientific (“Stellar”), an instrument provider to the research and development focused scientific community. bottom.
Stellar Scientific and inTEST Thermal Solutions have partnered to bring inTEST’s North Sciences Ultra Low Temperature (ULT) Biomedical Freezers to a wide range of customers. Importantly, the deal expands the market opportunity for NorthSciences products by offering Stellar’s GSA contracts to U.S. government agencies.
INTT’s future EV/sales multiple is 1.84, 33.3% lower than the industry average of 2.75. The company’s expected price-to-sales multiple is 1.79, 32.3% lower than the industry average of 2.65.
INTT’s 12-month ROCE was 17.19%, well above the industry average of 0.72%. ROTA over the past 12 months is 9.43%, well above the industry average of 0.31%.
INTT’s revenue for the first quarter of the fiscal year ended March 31, 2023 was $31.92 million, an increase of 32.5% year-over-year. Additionally, non-GAAP EBITDA increased 126.1% year-over-year to $4.83 million. Non-GAAP net income and EPS were $3.27 million and $0.29, respectively, up 158.2% and 141.7% year-over-year, respectively.
Street expects INTT’s revenue to grow 10.9% year-over-year to $129.61 million in 2023. The company’s EPS is expected to grow 17.2% YoY to $1.16 in 2023. It beat EPS estimates in three of the following four quarters. Over the past year, the stock has gained 206.1% and closed at $21.52.
INTT’s strong fundamentals are reflected in its POWR rating. The overall rating for this stock is ‘B’, which is equivalent to ‘Buy’ in our proprietary rating system.
It ranks 26th in the industry. Momentum is an A grade, growth is a B grade.Click to see additional INTT ratings for value, stability, sentiment and quality here.
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ADI shares were trading at $189.85 per share, down $1.46 (-0.76%) Tuesday morning. Year-to-date, the ADI is up 16.28%, compared with a 9.69% rise in the benchmark S&P 500 Index over the same period.
About the Author: Rashmi Kumari
Rashmi’s passion for capital markets, wealth management and financial regulatory issues inspired her to pursue a career as an investment analyst. With her Master of Commerce degree, she wants to make complex financial matters easier for individual investors to understand and help them make sound investment decisions.
post 3 chip stocks to buy this week first appeared in stocknews.com