Semiconductor stocks represent one of the most powerful investment categories as the central asset undergirds myriad digital innovations. Without the most advanced computer chips, none of the innovations that we take for granted – especially artificial intelligence – would be possible. Thanks to the tech sector fallout, many (if not most) of these enterprises are now on sale.
Of course, you want to be selective with your wish list. Not every semiconductor firm will enjoy resounding success. And some may have even further to drop before they truly look enticing. Still, other entities have become so cheapened that they’re worth taking a bet on. At the very least, you should keep your watch list warmed up.
Ultimately, in less than a decade from now, the semiconductor market could become a $2 trillion-plus ecosystem. That’s the narrative you want to focus on. With that, below are smart semiconductor stocks that are now trading at more attractive prices.
Qualcomm (QCOM)
Back in the latter half of July, I stated that I supported the bullish case for wireless semiconductor specialist Qualcomm (NASDAQ:QCOM). However, I wasn’t exactly enamored with the price. QCOM stock had gained a considerable amount of value. Yet there were also signs of weakness that suggested that shares had further to fall. I went on record to state that waiting for $140 would be ideal.
Keep in mind that at the time, QCOM stock was trading hands for around $193. Following Monday’s close, shares ended the session just south of $158. That’s a significant decline. And yes, it’s possible that QCOM could still have more to drop until $140. The thing is, that number isn’t guaranteed. If you want to nibble at the chipmaker now, it’s arguably not the worst idea in the world.
Right now, shares trade hands at 4.82X trailing-year sales. Considering that analysts believe fiscal 2024 revenue could land at $38.58 billion – and thus an increase of 22.9% from the prior year’s tally – shares are trading at 4.54X projected revenue (assuming a shares outstanding count of 1.11 billion). That makes QCOM one of the more attractive semiconductor stocks out right now.
Texas Instruments (TXN)
Texas Instruments (NASDAQ:TXN) represents another attractive idea for semiconductor stocks on discount. For one thing, the company offers myriad relevant products. It makes analog and embedded processing chips, which represent the backbone of the semiconductor ecosystem. Second, the tech giant has been paying a dividend for 20 years. Right now, the forward dividend yield stands at 2.87%.
Another attractive element is the consistent financial performances. In the past year since the second quarter, Texas has posted an average earnings per share of $1.44. This figure exceeded the collective consensus view of $1.38, thus yielding an earnings surprise of 4.85%. Even better, the print has been stronger in recent quarters.
Right now, shares trade hands at 10.68X sales. Granted, that’s a premium over the past year’s average metric of 9.03X. Following some projected choppy weather in fiscal 2024, the following year could see revenue of $17.95 billion. The high-side estimate calls for $21.09 billion. Last year, the company generated sales of $17.52 billion.
Combined with the passive income, TXN makes for an intriguing case for semiconductor stocks on sale.
Himax Technologies (HIMX)
One of the lesser-appreciated semiconductor stocks, Himax Technologies (NASDAQ:HIMX) is a fabless chip manufacturer. Primarily, the company specializes in image-processing technologies. It serves multiple sectors, including consumer electronics (televisions, PC monitors, laptops), mobile devices (phones and tablets) and automotive. Considering that these sectors aren’t projected to fade out anytime soon, Himax represents one of the more relevant entities.
Now, what makes HIMX stock attractive is the recent tech sector fallout. Prior to the implosion of red ink, Himax really started to gain traction. From late April to late June, shares moved up from under $5 to just under $9. However, July weakness compounded with the August selloff has turned HIMX negative for the year.
That could be an opportunity for contrarians. Right now, HIMX stock trades at 1.09X sales. In the past year, the metric stood at an average 1.12X. About one year ago, the average multiple was 1.14X. Now, it’s true that sales may take a slight dip this year. However, a sizable recovery could take place in fiscal 2025, making HIMX one of the semiconductor stocks to buy on the dip.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
