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Sun. Jul 14th, 2024

If you can only buy one semiconductor stock in May, it better be one of these three names

By Vaseline May30,2024

The technology industry has boomed over the past year and many are looking for semiconductor stocks to buy. Semiconductors have been a standout industry. The benchmark ETF for the semiconductor industry as a whole is the VanEck Semiconductor ETF (NASDAQ:SMH), which has returned 69% in the past year, while the S&P500 has only returned 26% within the same period.

Semiconductor stocks are at the forefront of innovation, and investors are still very interested in the industry’s ability to adapt and change.

Below, I discuss three semiconductor stocks that may not be well known compared to industry giants such as Nvidia (NASDAQ:NVDA), Advanced micro devices (NASDAQ:AMD), And Intel (NASDAQ:INTC). However, these stocks are emerging stocks that have seen impressive price appreciation and still have a decent valuation with room to grow within this fast-moving sector.

Here are some semiconductor stocks to buy:

Semiconductor Stocks to Buy: ACM Research (ACMR)

a magnifying glass enlarges the ACM logo on a website

Source: Pavel Kapysh / Shutterstock.com

ACM research (NASDAQ:ACMR) primarily supplies wafer cleaning and wet processing equipment to the semiconductor industry. It also offers electrochemical galvanizing services.

First quarter 2024 results were released on May 8. Total revenue and net profit both doubled year-over-year to $152 million and $22 million, respectively. First-quarter earnings exceeded analyst expectations, similar to those in the fourth quarter of 2023.

First quarter shipments increased 175% compared to the previous year. The overall outlook for full-year 2024 remained the same, with ACMR predicting total revenue to be between $650 million and $725 million.

Over the past year, the share price has risen 130%. And it continues to trade at a strong valuation, especially within the semiconductor industry. The forward price-to-earnings ratio is 12.98 times, while the industry average is 23.94 times.

ACMR still offers investors the opportunity for very strong returns, especially if it continues to beat analysts’ earnings forecasts.

ASE Technology (ASX)

Advanced Semiconductor Technology (ADR) (NYSE:ASX)

Source: Shutterstock

ASX Technology (NYSE:ASX) is a semiconductor and testing company that provides a wide range of industrial support services.

Over the past year, the share price has risen 48%.

On April 25, ASE Technology reported earnings results for the first quarter of 2024, stating that total revenue increased 1% and net profit decreased 2% year-over-year.

ASE Technology also offers investors a strong dividend yield, which is an anomaly, especially for the semiconductor industry. The dividend is paid out annually. The most recent dividend paid to investors was fifty-six cents per share and was paid on August 3, 2023. The total yield is currently approximately 5%.

Like ACMR, ASX trades at a fair valuation compared to the sector as a whole. The forward price-to-earnings ratio is 17.97 times, while the industry median price-to-earnings ratio is 23.94 times.

ASE Technology has experienced solid share price appreciation and continues to provide investors with a fair valuation. Definitely one of the best semiconductor stocks to buy, in my opinion.

Phototronics (PLAB)

PLAB stock: electronic board, pen, processor on the background of a schematic circuit diagram and photomask for the manufacture of printed circuit boards.

Source: Mentor57 / Shutterstock

Phototronics (NASDAQ:PLAB) specializes in the production and distribution of photomask technology for use in the production of integrated circuits and flat panel displays. It sells its products to several semiconductor manufacturers.

Over the past year, the share price has risen 29%.

On May 22, Photronics reported earnings for the second quarter of 2024, saying that total revenue of $217 million and net profit of $56 million fell 5% year over year.

PLAB also provided guidance for the third quarter, in which it expects revenue to be between $221 million and $229 million.

Photoronics has also undergone some recent leadership changes. The previous Chief Financial Officer, John Jordan, retired in February. On May 28, Eric Rivera, the interim CFO following the retirement of John Jordan, was named the new CFO.

PLAB trades at a price-to-earnings ratio of 13.00 times, while the average price-to-earnings for the industry is 23.94 times.

The recent lackluster earnings report has left investors somewhat shocked and deciding to sell their shares. But with an improved outlook for the third quarter of 2024 compared to the second quarter. PLAB still offers decent potential for investors looking for semiconductor stocks to buy.

At the time of writing, Noah Bolton had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publishing Guidelines.

Noah has about a year of freelance writing experience. He has worked with Investopedia on topics such as the stock market and financial news.

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