2 Semiconductor Stocks Under $10 Listed Buy to Buy in January
As the demand for consumer electronics grows worldwide to stay connected remotely, the demand for the semiconductor chips needed to power gadgets is on the rise. This, along with the growing demand for semiconductors from the burgeoning electric vehicle industry, has created a massive imbalance between supply and demand. However, the resulting price increase has worked well for chipmakers. This has drawn investor attention to the semiconductor space, as evidenced by the SPDR S&P Semiconductor ETFs (XSD) Returns of 19.4% over the past six months versus SPDR S&P 500 ETFs (TO SPY) 6.3% yield.
As semiconductor makers ramp up production with government support to meet growing demand, the supply shortage may not end anytime soon. With the increasing applicability of chips in the technological era, defined by the Internet of Things (IoT), Artificial Intelligence (AI), 5G network and cloud computing, the demand for chips is expected to continue to increase. According to Research and Markets, the global semiconductor market is expected to grow at a pace CAGR over 6% by 2026.
In this favorable context, it makes sense to bet on ASE Technology Holding Co., Ltd. (ASX) and O2Micro International Limited (OIIM), which are currently trading below $10 but harbor immense upside potential.
ASE Technology Holding Co., Ltd. (ASX)
Based in Kaohsiung, Taiwan, ASX provides a range of semiconductor packaging and testing services and electronics manufacturing services internationally. The Company offers packaging services, stacked die solutions in various types of packaging, and copper and silver wire bonding solutions. In addition, the company provides IC wire connection packages, system-in-package products, modules and interconnect materials.
On November 15, 2021, ASX announced that it had achieved the best overall performance on the Dow Jones Sustainability Indices (DJSI) – Semiconductors and Semiconductor Equipment Industry Group for the sixth consecutive year. Achieving the DJSI is a firm recognition of ASX’s outstanding performance in sustainability, in tandem with growth and innovation in a competitive global industry.
ASX’s net income increased 22% year-over-year to NT$150.67 billion ($5.45 billion) for the third quarter ended September 30, 2021. Its net income increased increased 111.2% year-on-year to NT$14.18 billion ($512.98 million), while its EPS increased 107.8% year-on-year another to reach NT$3.20.
For the quarter ending March 31, 2022, analysts expect ASX EPS and revenue to increase 28.6% and 17.7% year-over-year to 0.18 and $5.01 billion, respectively. It has exceeded consensus EPS estimates in each of the past four quarters. Over the past three months, the stock has gained 6% to close yesterday’s trading session at $7.48.
ASX’s strong fundamentals are reflected in its POWR Rankings. The stock has an overall rating of B, which is equivalent to Buy in our proprietary rating system. It has an A rating for Value and Sentiment and a B rating for Momentum.
We also rated ASX for growth, stability, and quality. Click on here to access all ASX ratings. ASX is ranked No. 43 out of 100 A-rated stocks Semiconductor and wireless chip industry.
O2Micro International Limited (OIIM)
Based in George Town, Cayman Islands, OIIM is engaged in the design, development and marketing of integrated circuits and solutions for power management components and systems internationally. The Company’s offerings include analog and mixed-signal ICs, control and monitor battery charging and discharging, and provide select and switch functionality and other products.
On January 20, 2022, the OIIM announced the issuance of the patent for a critical system and method for driving a light source. Dr. Yung Lin, Executive Vice President, OIIM, said, “This invention provides a cost-effective solution for system power management where regulated DC output and LED driver are present.
OIIM’s revenue increased 22.6% year-over-year to $27.27 billion for the third quarter ended September 30, 2021. Its net income increased 25.5% from year-over-year to $3.68 billion, while its EPS rose 20% to $0.12.
Analysts expect OIIM’s EPS and revenue to grow 19.4% and 11.6% year-over-year to $0.43 million and $112.40 million, respectively , in fiscal 2022. It has exceeded consensus EPS estimates in three of the last four quarters. Over the past three years, the stock has gained 145.3% to close yesterday’s trading session at $4.05.
OIIM’s POWR ratings reflect a strong outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. It has an A rating for value and a B rating for sentiment and momentum.
Click here to see additional POWR ratings for OIIM (Growth, Stability, and Quality). It is ranked #33 in the same industry.
ASX shares remained unchanged in after-hours trading on Thursday. Year-to-date, the ASX is down -4.23%, compared to a -5.94% rise in the benchmark S&P 500 over the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the dos and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing stocks. Following…