There are plenty of sectors within the tech industry. But no sector is more important than the engines of all the devices that have become so commonplace in our daily lives.
Few of us think about how rapidly we have gone from an analog society into a digital society.
Do you remember carrying road maps with you to navigate a long-distance road trip — or even to an unfamiliar part of the city? How about what you did when you didn’t have a mobile phone or complete access to the internet? Or the internet itself?
All these transformations were accomplished because of chip companies. And now that the election is over the markets are getting down to the business of making bets on top-performing sectors moving forward.
One of the big winners is going to be tech. That’s why I’ve chosen these seven A-rated stocks that power the tech industry for you.
A-Rated Tech Stocks: Texas Instruments (TXN)
Texas Instruments Incorporated (NYSE:TXN) started in the 1930s as an engineering company for the oil and gas industry. When WWII broke out, TI got in the defense game.
Then, in 1958, a TXN engineer invented the semiconductor chip. You can hardly get any closer to launching the Computer Age than that.
It also had some very cool calculators back in 1970s.
But now, TXN is in the midst of another revolution .. a $165 billion industry that’s expected to grow nearly 60% in the next seven years — embedded computing.
Basically, embedded computing is when a computer “brain” operates a machine. For example, a car’s embedded sensors are computers wrapped in tires and an internal combustion engine.
This technology is also a key part of the Internet of Things (IoT) trend that is growing by leaps and bounds. It’s about networking everyday objects into a “smart” network that allows you to customize everything from your toaster to your car maintenance.
TXN is the reigning champ of embedded computing, and that will keep it growing for many years to come.
A-Rated Tech Stocks: Qualcomm (QCOM)
Qualcomm, Inc. (NASDAQ:QCOM) is the most dominant mobile chip maker on the planet.
But it isn’t QCOM’s production that makes it such a major force. It’s the fact that it licenses its technology to companies and custom builds chips for phone makers and then licenses that chip tech.
In 2015, Chinese authorities made a bold stand against Qualcomm, calling its pricing power and dominance a monopoly that was anti-competitive. The stock plummeted.
But QCOM worked out a deal both it and China can live with and has gone on to regain its preeminent position in the mobile chip market.
It’s up over 50% since its February 2016 lows and still throws off a rock-solid 3.2% dividend yield. If you’re looking for a stock that is a fundamental play on the expansion of mobile telecom, then look no further than Qualcomm.
For example, Mashable recently wrote that QCOM’s newest Snapdragon 835 chip set “will power every premium Android phone in 2017.” You don’t get more bullish than that.
A-Rated Tech Stocks: Nvidia (NVDA)
Nvidia Corporation (NASDAQ:NVDA) started as a premium chip for graphics. That meant serious gamers would either buy machines with NVDA graphics cards or they would buy the cards and put them in their computers. The same with graphic designers and engineers and architects.
That was a good business. But building graphics chips is a highly competitive industry and Nvidia was up against major competition from the major players in the chip sector. So NVDA looked to the future and how it could capture a market that was the next iteration of conventional graphics. What it landed on is the next generation of computing — data visualization, or visual computing.
You know the graphics that are showing up in your car to show mileage, gas consumption, entertainment, etc? That is visual computing. And it’s already a major business.
So now, NVDA is the major player in sectors like Big Data, driverless cars, healthcare and the graphics systems that are being incorporated in virtually every car that comes off the assembly line nowadays.
A-Rated Tech Stocks: Silicon Motion (SIMO)
Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO) is a major player in another market that has built-in growth for decades to come.
The faster computers get, the faster they can process information. For computer engineers, that means you can build more complex programs that can run as fast as simpler programs used to.
For consumers, it means you can carry around a dozen movies on a thumbdrive.
Data storage is an absolute necessity, and SIMO specializes in flash memory (the memory on your iPod or thumb drive) as well as controllers for state-of-the-art solid-state drives (SSDs).
SSDs are able to manage massive amounts of data in an incredibly compact space and allows laptops and mobile devices to store and manage significantly more data than conventional hard drives.
SIMO has had a very good 2016, up nearly 40% year to date. But this is just the beginning. Memory chip demand will only continue to grow in coming years.
A-Rated Tech Stocks: Nanometrics (NANO)
Nanometrics Incorporated (NASDAQ:NANO) isn’t likely a name that you are familiar with, unless you are well versed in chip stocks.
It is a business-to-business (B2B) player that builds advanced process control systems. What does this mean?
Well, there’s a metric in much of computing that is called the Five Nines. What it means is your equipment needs to be available 99.999% of the time. So Five Nines is a core metric when chip makers are building their drives. NANO builds the equipment and manages the processes of making sure everything that is rolling off the line is up to the task.
This certainly isn’t very sexy, but it’s absolutely essential to the entire industry.
NANO reported earnings in late October and the company continues to grow at a rapid clip. In recent days the stock has sold off, but it’s still up nearly 50% year to date. That makes this a great time to establish a position.
A-Rated Tech Stocks: Cirrus (CRUS)
Cirrus Logic, Inc. (NASDAQ:CRUS) is a leading maker of integrated circuits for consumer audio, mobile communications and automotive audio.
Its client list includes companies like Samsung (OTCMKTS:SSNLF), Motorola, Ford Motor Company (NYSE:F), LG Electronics, Harman International Industries Inc (NYSE:HAR), Bose and Sony Corp (ADR) (NYSE:SNE). That’s quite a client list.
CRUS is very good at what it does, and it is one of the more established players in the tech industry in general, having opened up shop in 1984, before most people even knew what a mobile phone was.
But now, its services are in enormous demand and it can command top prices for its products because it is such an established player.
You won’t see its customers putting a ‘Powered by Cirrus Logic” label their products. But all you need to know is if you’re buying quality products that have audio as a featured part, CRUS equipment is likely making them all work.
The stock took a 12% hit in the past week, but it’s up 71% year to date, so you can use this opportunity to get a stake in a very promising company.
A-Rated Tech Stocks: Cabot Microelectronics (CCMP)
Cabot Microelectronics Corporation (NASDAQ: CCMP) has built a very rewarding niche among chip stocks.
It is the world’s leading supplier of chemical mechanical planarization slurries (CMP). Sounds impressive, but what does it mean?
Well, the short answer is, it makes the silicon wafers that chips are built on more reliable and of higher quality. When you make a chip, depending on what its ultimate use is, it has layers of various chemicals deposited on it so it can function at its best. But each of these layers needs to be as clean and flat as possible to provide both quality and efficiency.
That is why CMP is so crucial to the Digital Age and why CCMP stock is such an important player. Cabot saw its initial heyday in the dotcom boom but managed to get through that and has been a solid player ever since. Year to date, the stock is up 35% and looks like there is plenty of headroom left.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
