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During a difficult year for technology stocks, the main semiconductor index has fared even worse.

This is because investors don’t yet have a handle on how much of a slowdown in growth should be expected when chipmakers ramp production high enough to end the supply shortage.

But some companies are expected to maintain a solid pace for sales and earnings growth. They are listed below.

Read: Why semiconductor stocks are ‘almost uninvestable’ despite record earnings amid a global shortage

In the article above, Wallace Witkowski explains how investors and analysts think ahead and react quickly. During a year in which record profits for the semiconductor industry are expected, the iShares Semiconductor ETF SOXX, -3.54%, which tracks the industry benchmark PHLX Semiconductor Index SOX, -3.44%, was down 23% for 2022 through April 25, while the SPDR S&P 500 ETF Trust SPY, -1.84% was down 9.9% and the Invesco QQQ Trust QQQ, -2.90%, which tracks the Nasdaq-100 Index NDX, -2.91%, was down 17.2%.

Loss of confidence in semiconductor stocks

For 2022, the SOXX group (30 stocks of chipmakers and manufacturers of related equipment) weighted by market capitalization is expected to increase sales by 18% and earnings per share by a whopping 42% from 2021 levels, based on consensus estimates among analysts polled by FactSet.

But 2021, fueled by government stimulus, is already ancient history. What if we look at estimates with 2022 as the base? Here are weighted aggregate sales per share and EPS estimates for SOXX, QQQ and SPY through 2024, with expected compound annual growth rates (CAGRs).

First, sales per share:

ETF Ticker Expected Sales CAGAR – 2022 through 2024 Estimated sales per share – 2024 Estimated sales per share – 2023 Estimated sales per share – 2022
iShares Semiconductor ETF SOXX, -3.54% 8.4% $106.50 $98.44 $90.71
Invesco QQQ Trust QQQ, -2.90% 10.3% $95.89 $86.29 $78.84
SPDR S&P 500 ETF Trust SPY, -1.84% 5.2% $187.92 $178.42 $169.75
Source: FactSet

Many companies have fiscal years that don’t match the calendar. Estimates in this article are all for calendar years.

Now earnings per share:

ETF Ticker Expected EPS CAGAR – 2022 through 2024 Estimated EPS – 2024 Estimated EPS – 2023 Estimated EPS – 2022
iShares Semiconductor ETF SOXX 7.1% $30.25 $29.31 $26.37
Invesco QQQ Trust QQQ, -2.90% 13.3% $17.54 $15.52 $13.67
SPDR S&P 500 ETF Trust SPY, -1.84% 9.9% $27.65 $25.07 $22.90
Source: FactSet

For sales, SOXX is expected to be in the middle of the three, with a CAGR of 8.4% from 2022 through 2024. That’s a far cry from the 18% sales growth expected for 2022. But for EPS, the picture is worse, with an expected two-year CAGR of 7.1% ranking third, and comparing very unfavorably to the 42% EPS growth expected for 2022.

Companies that are potential exceptions

For a broad screen of semiconductor stocks listed in the U.S., we began with the SOXX 30 and then added all companies outside of SOXX in the S&P Composite 1500 Index SP1500, -1.68% (made up of the S&P 500 SPX, -1.80%,  the S&P 400 Mid Cap Index MID, -1.72%  and the S&P 600 Small Cap Index MID, -1.72% ) in the “Semiconductors and Semiconductor Equipment” Global Industrial Classification Standard (GICS) industry group.

This gave us an initial screening group of 58 stocks.

These 16 companies are expected to show double-digit sales CAGR from 2022 through 2024.

First, here are the the group’s expected sales CAGR numbers, with sales estimates in millions:

Company Ticker Two-year estimated sales CAGR Estimated revenue – calendar 2024 Estimated revenue – calendar 2023 Estimated revenue – calendar 2022
Wolfspeed Inc. WOLF 37.4% $1,670 $1,264 $885
First Solar Inc.. FSLR, -0.54% 25.2% $3,980 $3,298 $2,538
Enphase Energy Inc.. ENPH, -3.19% 25.2% $3,134 $2,610 $2,001
SiTime Corp. SITM, -5.28% 23.1% $450 $366 $297
SolarEdge Technologies Inc.. SEDG, -1.66% 21.9% $4,319 $3,660 $2,906
Universal Display Corp. OLED, -4.84% 17.4% $885 $736 $642
Marvell Technology Inc.. MRVL, -3.51% 16.3% $8,052 $7,115 $5,953
Taiwan Semiconductor Manufacturing Co. ADR TSM, -3.16% 16.2% $97,315 $83,004 $72,103
Monolithic Power Systems Inc.. MPWR, -5.26% 15.9% $2,068 $1,785 $1,539
SunPower Corp. SPWR, -2.49% 15.8% $2,089 $1,868 $1,558
Teradyne Inc.. TER, -3.06% 15.2% $4,610 $4,244 $3,474
Silicon Laboratories Inc.. SLAB 15.1% $1,313 $1,160 $991
Nvidia Corp. NVDA, -5.25% 14.8% $45,004 $40,096 $34,157
Micron Technology Inc.. MU, -3.17% 14.0% $47,026 $42,145 $36,212
ASML Holding N.V. ADR ASML, -5.84% 12.7% $30,774 $27,832 $24,239
Advanced Micro Devices Inc.. AMD, -5.13% 10.9% $26,426 $24,068 $21,482
Source: FactSet

And now the group’s expected EPS CAGR:

Company Ticker Two-year estimated EPS CAGR Estimated EPS – calendar 2024 Estimated EPS – calendar 2023 Estimated EPS – calendar 2022
Wolfspeed Inc. WOLF N/A $2.27 $1.04 -$0.22
First Solar Inc.. FSLR, -0.54% 251.4% $4.11 $2.23 $0.33
Enphase Energy Inc. ENPH, -3.19% 25.3% $5.04 $4.13 $3.21
SiTime Corp. SITM, -5.28% 21.3% $5.35 $4.64 $3.63
SolarEdge Technologies Inc. SEDG, -1.66% 39.5% $9.71 $7.93 $4.99
Universal Display Corp. OLED, -4.84% 24.4% $7.08 $5.49 $4.57
Marvell Technology Inc. MRVL, -3.51% 24.1% $3.44 $2.86 $2.23
Taiwan Semiconductor Manufacturing Co. ADR TSM, -3.16% 13.2% $7.31 $6.27 $5.70
Monolithic Power Systems Inc. MPWR, -5.26% 16.1% $13.05 $11.26 $9.67
SunPower Corp. SPWR, -2.49% 79.5% $1.07 $0.67 $0.33
Teradyne Inc. TER, -3.06% 24.8% $7.47 $6.74 $4.80
Silicon Laboratories Inc. SLAB, -2.93% 30.2% $4.45 $3.37 $2.62
Nvidia Corp. NVDA, -5.25% 17.1% $7.61 $6.59 $5.55
Micron Technology Inc. MU, -3.17% 13.4% $13.82 $13.29 $10.74
ASML Holding NV ADR ASML, -5.84% 20.1% $25.76 $22.13 $17.85
Advanced Micro Devices Inc. AMD, -5.13% 17.8% $5.55 $4.69 $4.00
Source: FactSet

Click on the tickers for more about each company.

You should also read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

It’s notable that a quarter of the companies on the list are focused on solar power generation, including First Solar Inc. FSLR, -0.54%, Enphase Energy Inc. ENPH, -3.19%, SolarEdge Technologies Inc. SEDG, -1.66% and SunPower Corp. SPWR, -2.49%. Here’s a look at the transition of power plants to solar generation with battery storage that is already under way.

For investors with very long-term horizons, SOXX may be the best way to participate in the semiconductor industry. For others with a more tactical approach, the screen above may serve as a starting point for further research.

Don’t miss: Dividend Aristocrat stocks can help you keep ahead of inflation. These 15 take top prizes for raising payouts.

Source: This post first appeared on http://marketwatch.com/

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