We all rely on technology to carry out everyday functions, like communicating, workin, and driving. However, have you ever wondered what powers our technology today? It turns out, all of the power lies within a tiny little device, called a semiconductor. These power the things we rely on daily. As a result, there’s definitely a semiconductor stock out there with your name on it.
These little devices are absolutely essential to our lives and society. Without these devices, our world as we know it would grind to a halt. This is especially true with new advances in artificial intelligence. We now need more efficient and cheaper semiconductors. The industry for semiconductors has boomed in the last couple of decades.
With such a heavy reliance on these products, it’s unsurprising that the semiconductor industry still has the opportunity to provide some of the best investments that we can make. In this article, we will detail three of the best companies in the semiconductor industry. These are surefire bets for investing this December.
A sign on a brick well for NXP Semiconductor. NXPI stock.
Source: Lukassek / Shutterstock.com
NXP Semiconductors N.V. (NASDAQ:NXPI) produces components of computer chips that go into numerous different markets. These include the automobile, industrial and communication infrastructure markets. With corporations like Sony and even the United States government using NXP products, this company is definitely in good hands. They are expected continue to be a market leader and a solid semiconductor stock. In fact, 25 Yahoo Finance analysts predict the stock to trade within a range of $150 to $260.This is with an average price of $221.
The company just recently released the AW693. This is a product that establishes high connectivity within new cars, allowing for the newest to have even better Wi-Fi and Bluetooth connections than ever before. This new release along with NXPI’s EdgeLock security system provides unmatched safety and connectivity to the newest cars using these products. This aids in NXP’s growth into the automotive division.
Looking at its financials, we see that its NXPI is currently undervalued. With the semiconductor industry having a P/E ratio of 37.66 times in Q3, NXP’s P/E ratio of only 18.55 times positions it at a relative discount. NXP boasts an outstanding EPS growth, averaging out to be ~56% in the past two years. With practical new releases, a discounted P/E ratio, and a booming EPS, investing in NXP right now would be a safe and rewarding bet.
Qualcomm Incorporated (QCOM)
Source: Shutterstock
Qualcomm Incorporated (NASDAQ:QCOM) is a global semiconductor corporation. It provides wireless solutions to drive the evolution of the telecommunications industry and the capabilities of mobile devices. The company is currently trading at $127.50, with Yahoo Finance analysts projecting a one-year price range of $100-$160. This is with an average target price of $138.11.
QCOM saw a significant surge in its price following strong financial results fueled by a strong 34% return on equity. This greatly outperformed the industry average of 15.51%. This demonstrates an effective financial management and the continuation of strong profit margins for QCOM. With future ROE expected to increase to approximately 36%, this company should no doubt be on the radar for any investors in the tech sector.
Cristiano Amon, the company’s president and CEO, expressed confidence in the company’s strategy and execution. This was with regard to its position in on-device generative AI and mobile computing. With expectations for AI to continue driving growth in the tech industry, QCOM will no doubt find its niche as a leader in the telecommunications sector. Qualcomm Incorporated is a great semiconductor stock, and you should highly consider investing.
Taiwan Semiconductors (TSM)
image of TSM semiconductor office building
Source: Sundry Photography / Shutterstock.com
Taiwan Semiconductors (NYSE:TSM) is a company known for having over 54% share of the global semiconductor market. With 12,698 different products and historical servicing to more than 500 companies in 2022 alone, it’s not surprising to see that Yahoo Finance analysts protect a one-year price of $113.36
Similar to Qualcomm Incorporated (NASDAQ:QCOM) Taiwan Semiconductors will no doubt benefit from the increased demand for semiconductors. Already, it has made developments to create Semiconductor fabricators in America. There are also plans to make an $11 billion fabricator in Germany to keep pace with high demand.
With a P/E ratio of 17.59 times, TSM sits at a relative discount to its five-year average of 22.68 times and sector median of 19.53 times. Its recent spike in its EPS value and relative stability of its P/E Ratio signals that its share price has been growing almost proportionally with its earnings. If you haven’t already, I suggest looking at TSM for a potential buy this December. With fast-paced trends and continued demand for semiconductors, this company only has room to grow. This one is easily a top semiconductor stock.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chandler Capital is the work of Ian Hartana and Vayun Chugh. Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.
