Semiconductor Stocks: A New Buy in a Critical and Growing Industry
“Time is money.”
It’s as true now as when Ben Franklin wrote that back in 1748 in his essay, Advice to a Young Tradesman.
It takes time to compound your money and multiply your wealth.
On the other hand, time spent out of the market often (usually!) results in lost profits.
And here’s a new one in our digital age: Companies that help devices work together in time can help investors make money.
One such company just caught the attention of fellow growth investor Louis Navellier and me …
It’s easy to take for granted the things we can do in the digital age.
Everything is so easy. With a few pushes or swipes, we can do everything from buy a car to order pizza … not to mention work from home, visit our doctor remotely, attend school online, and all of the other things we’ve accelerated during the pandemic.
But these things don’t just happen.
They take thought and a piece of equipment that is about as reliable as anything man has created.
I’m talking about semiconductors — or “chips.”
I’ve liked semiconductors as an investment almost my whole career. Perhaps more than anything, they are key to the technology revolution.
If you’ve been investing a while, you remember how Intel (NASDAQ:INTC) was the king of semiconductors and saw its stock soar more than 3,700% in the 1990s.
Applied Materials (NASDAQ:AMAT) made the equipment that manufactured all those semiconductors. Its return in the 1990s? More than 7,000%.
The semiconductor industry as a whole is expected to have returned to growth in 2020 after a lousy 2019. World Semiconductor Trade Statistics predicts that despite disruptions from the pandemic, chip sales increased 5.1% from 2019 to $433 billion last year. By this year, sales should continue to rise 8.4% to $469 billion.
That’s not surprising because chips play such a vital role in breakthrough innovations coming our way here in the Roaring 2020s. Take the rollout of 5G. This is creating more dense networks that use shorter-range radios, higher frequencies, and tighter channels. Getting things to sync up correctly requires an efficient semiconductor timing solution up to 10X faster than what 4G required.
Take it a step further. One of the biggest and most lucrative trends that will flourish thanks to the high speeds of 5G is the rise of autonomous vehicles (AVs). Vehicles must be able to react instantly and reliably. To make that happen, vehicles of the future will require many more semiconductors, sensors, and cameras.
Louis Navellier, one of my colleagues and a legendary growth investor, is also extremely bullish on semiconductors.
Louis and I again joined forces to come up with Power Portfolio 2021. We analyzed more than 5,000 stocks and uncovered the investing themes with the most upside potential for 2021. And we’ve combined our two systems to narrow them down to the small portfolio of select stocks we think have big upside potential for the year ahead.
We did this last year and helped a small group of readers learn how to beat the market by 6X. We’re off to a really strong start again this year, and just about an hour ago we released our latest buy recommendation.
And yes … it’s a semiconductor company.
The company’s timing devices work like a sort of heartbeat for a variety of chips used in modern electronics systems, ensuring all the chips in a system work in sync with one another.
Its products are so small that you can’t even see them with the naked eye! And yet they quietly operate in the background of a huge number of advanced products –from smartphones, tablets, and earbuds to medical devices, factory machinery, and even earthquake detection systems.
Overall, this company has shipped more than two billion timing devices across 250 applications. And management says this is just the beginning. They expect the company’s chips could be used in 500 … 1,000 … or possibly even more applications going forward.
That leaves a lot of room for upside. Earnings are estimated to surge a stunning 285.7% over the next couple of years.
With its robust growth, superior fundamentals, and strong presence in a hypergrowth area, we view this company as a strong addition to our Power Portfolio 2021.
On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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