The following is an analysis of 5 stocks of major manufacturers of chipsets, processors, and semi-conductors (read: CPUs) with projected results and substantial cash potential accompanied by an analysis of their price targets. Three of the five stocks are available and can be purchased through the Gotrade application.
Almost all current devices require a chip and/or processor (CPU) to function properly.
Not only computers, tablets, and smartphones, even the latest generation of cars are now completely computerized.
Recently, there has been a problem in the supply of semiconductors, which is estimated to remain unresolved until 2023.
For investors looking for long-term investments, Gokul Hariharan, a JPMorgan semiconductor analyst, told CNBC recently to look at two industry trends that structurally look to have a “very positive” trend over the next three to five years.
The second trend is the need for "highend computing" or high-level computing technology that has led companies such as Apple, Tesla, and Amazon to meet by trying to design their own chips.
The second trend is the rise of Chinese companies focusing on so-called “legacy, long-tail technologies” such as power management, sensors, and similar industries.
For those of you retail investors, stock savers who want to invest in the long term with a time of about 12 months and want to get good potential cash returns, these 2 long-term trends may look tempting but are less sexy for some people.
The following are five stock issuers of large-cap chip manufacturing companies accompanied by an analysis that focuses on stock prices, the total increase in returns over the last 12 months, price targets and potential targets for increasing stock prices over the next 12 months.
One of these five companies has even reported quarterly results after the market closed last Thursday (9 December 2021).
NVIDIA
Gamers, videographers, overclockers, and PC enthusiasts will immediately recognize the Nvidia brand (NASDAQ: NVDA), AMD's strongest competitor in terms of dedicated graphics cards.
This company has become not only a graphics card chip maker but also reaches the cloud computing sector.
There is no denying that Nvidia Corporation was the top semiconductor stock last year.
Its share price has increased by more than 135% over the last 12 months, its net profit margin is almost 34% which is the highest figure in this group with the total return to shareholders (including dividends, buybacks and debt payments) over the last 12 months is around 145% .
The stock's target average (median) price is $350, implying a potential 10.4% increase to its current price of around $317.
The highest price target is around $400, so the potential for an increase is 26.2%.
Fiscal 2022 revenue (ends in January) is forecast to increase by nearly 60% year-over-year, with adjusted earnings per share (EPS) projected to increase by 19%.
Nvidia has reported a staggering average revenue of 3.85% and above over the past four quarters.
In addition, EPS rose surprisingly with an average increase of 7.47% over the same period.
It's quite astonishing that Nvidia even beats estimates on both measures of the indicator on a quarterly basis.
Oh yes, NVDA is included in the ranks of Islamic stocks at Gotrade.
BROADCOM
By market capitalization, Broadcom Inc. (NASDAQ: AVGO) trails only Nvidia in the five stocks we discuss here.
Broadcom's share price has increased by 43% over the past 12 months and its profit margin over that period is 22.9%.
Meanwhile, the total return to shareholders is around 43%.
Looking ahead, at current prices around $586.40, AVGO shares are trading above their target price average of $573.80.
Based on the high target of $660, AVGO has a potential increase of around 12.6%.
For the Broadcom 2022 fiscal year ending in January, analysts expect a 26.4% increase in adjusted EPS and a 14.7% increase in revenue.
Broadcom has reported a surprising increase in EPS by an average of 1.5% over the last four quarters.
Meanwhile, the average income also increased 0.7% during the same period.
The company also beat consensus estimates on both metrics in each of the indicators from the previous four quarters.
AMD
Advanced Micro Devices Inc. (NASDAQ: AMD) is the third largest company on this list, with a market cap of approximately $183 billion.
As with Nvidia, AMD is known as the toughest rival in the graphics card segment after acquiring ATI Radeon.
Now, its line of business is not only chips for graphics cards (GPU: Graphic Processing Unit) but also processors in the personal computer segment (laptops and desktops) as well as the server and cloud chip segments.
For those who like to work on computers, they definitely know about their products, such as AMD Ryzen and AMD Epyc.
AMD's stock price managed to increase by about 53% in the last 12 months, and its net profit margin during that period was 26.72%.
The total stock return in one year is 58.4%.
As with Broadcom, AMD's share price recently ($141.90) exceeded its average price target of $140.
The highest price target is at the level of $180 with a potential increase of 26.8%.
For the 2022 fiscal year ending in January, AMD is expected to report a 65.2% year-over-year increase in revenue with 105% EPS growth.
Over the past four quarters, AMD has beaten the consensus estimate of median revenue by 6.4% with the estimated average EPS of 13.69%.
AMD beat forecasts on both indicator metrics in all four quarters. Wow..!
You can buy all three shares (AMD, NVDA, and AVGO) on Gotrade.
Marvell
Marvell Technology Inc. (NASDAQ:MRVL) managed to do well in its third-quarter fiscal results last week and received rave reviews from the financial world.
MRVL's stock has added nearly 30% since last Thursday, and its share price has surged nearly 112% over the past 12 months.
Marvell is the only stock among this group of semi-conductors with a negative net profit margin (−10.48%).
This is likely due to recent acquisitions to expand margins and reduce operating costs.
The total return of shareholders over the past year has almost reached 118%.
The average stock price target is $100. This implies a potential increase of 8.1% to the stock price of around $92.50.
The highest price target is at $120 with a potential increase of almost 30%.
For Marvell's 2022 fiscal year ending in January, analysts expect year-over-year revenue growth of nearly 50% and adjusted EPS growth of 42.6%.
Marvell has beaten the average consensus revenue estimate of 2.4% over the past four quarters with an estimated average EPS of 9.12% over the last three quarters.
This met estimates in the first fiscal quarter.
Quite interesting indeed. Unfortunately this stock is not yet available on Gotrade (as of 10 Dec 2021).
NXP Semiconductors
NXP Semiconductors NV (NASDAQ: NXPI) shares are the smallest of the five semiconductor makers in this review with a market cap of approximately $60.3 billion.
NXPI's share price is up only about 38% over the last 12 months.
However, NXP's net profit margin of 45.6% makes it the third best on this list.
The total return of shareholders over the past year has reached 45.7%.
Based on the average target price of $241 and the stock price of around $226.80, the potential upside for NXPI shares is around 6.3%.
The share price target is highest at $300, with a potential increase of 32%.
For NXPI's 2022 fiscal year ending January, revenue forecasts show a year-on-year increase of 27.2% while adjusted EPS is forecast to increase by 72.9%.
Over the past four quarters, NXP has beaten the consensus average revenue estimate of 0.8% and the average EPS estimate of 4.06%.
The company beat estimates on both metrics in all four quarters.
Unfortunately, NXPI also cannot be purchased through Gotrade.
Disclosures: The author owns AMD and NVDA shares in the Gotrade account portfolio.
Use the above information wisely. This article is not an invitation to buy the shares listed in the article. All investment decisions and their accompanying consequences and results are in your own hands.
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