For Immediate Release
Chicago, IL - December 27, 2016 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include NVIDIA Corporation (NASDAQ: NVDA - Free Report ), Micron Technology, Inc. (NASDAQ: MU - Free Report ), Applied Materials Inc. (NASDAQ: AMAT - Free Report ), Microsemi Corporation (NASDAQ: MSCC - Free Report ) and KLA-Tencor Corporation (NASDAQ: KLAC - Free Report ).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Friday's Analyst Blog:
Which Semiconductor Stocks Will Be the NVIDIA of 2017?
After a highly volatile first half, the stock market is poised to end 2016 on a solid note, thanks to a rebounding U.S. economy as evident from recently released improved economic data for GDP, Consumer Confidence Index, unemployment rate and factory activity data.
The technology space continues to be investors' favorite due to its dynamic nature. It is expected to grow faster than ever before. Therefore, if you invest right, you can reap the benefits over time.
Among the 11-sub industries in the broader technology sector, the semiconductor industry has been one of the outperformers so far this year. After an abysmal 2015 that saw iShares PHLX Semiconductor ETF (SOXX) lose over 3.3%, stocks across the semiconductor landscape have rebounded well this year.
Notably, the ETF, which represents semiconductor stocks, has witnessed a year-to-date (YTD) gain of approximately 39%, while the Technology Select Sector SPDR ETF (XLK), which represents the overall technology sector, returned 14.2% YTD.
NVIDIA Corporation (NASDAQ: NVDA - Free Report ) remains one of the best performers in the semiconductor space. The stock has been clocking solid returns since the beginning of 2016 and has gained over 225% YTD, well outperforming the Zacks Semiconductor-General industry's return of just about 31.6%.
The robust performance is mainly because of the company's phenomenal results in back-to-back quarters. This has boosted investor confidence in the stock as many realized that the company is much larger than simply GPUs.
Notably, this Zacks Rank #1 (Strong Buy) company has surpassed the Zacks Consensus Estimate in the trailing six quarters with an average positive surprise of 49.3%. Over the past several quarters NVIDIA has been witnessing significant top and bottom line growth on a year-over-year basis mainly driven by robust performance in three of its four major segments - gaming, datacenter and automotive.
However, NVIDIA's remarkable run may not continue next year as the company is currently trading at a higher price/earnings (P/E) multiple than the industry average. So, we believe that NVIDIA with its hefty forward P/E valuation of 44.0x compared with the industry average of 18.0x may be a risky bet. Moreover, the stock currently carries a VGM Style Score of "D," which makes us slightly skeptical about the stock's future.
As we approach 2017, we should look for stocks that have the potential to record significant growth like NVIDIA did in 2016.
Other Picks in the Industry
As the U.S. economy is rebounding, we believe that there are tremendous growth opportunities for semiconductor stocks in 2017.
Notably, as per latest predictions from World Semiconductor Trade Statistics (WSTS), semiconductor sales are likely to increase 3% in 2017 and 2% in 2018.
Right now, the semiconductor segment has several promising stocks to choose from. Here we have picked four semiconductor stocks that have performed well so far this year and have the potential to keep the momentum going in the next year. They also have a favorable Zacks Rank #1 or #2 (Buy), VGM Style Score of "A" or "B," and low P/E multiple than the industry average. You can see the complete list of today's Zacks #1 Rank stocks here .
Micron Technology, Inc. (NASDAQ: MU - Free Report ) has established itself as one of the leading worldwide providers of semiconductor memory solutions. The stock carries a Zacks Rank #1 and has a VGM Style Score of "A." Moreover, Micron Technology currently trades at a forward P/E multiple of 14.6x, which is lower than the industry average of 18.0x. Year-to-date, the company has gained 63.8%.
Applied Materials Inc. (NASDAQ: AMAT - Free Report ) develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry. The stock carries a Zacks Rank #1 and has a VGM Style Score of "A." Moreover, Applied Materials has a long-term EPS growth estimate of 13.7% and currently trades at a forward P/E multiple of 13.7x which is lower than the industry average of 17.1x. Year-to-date, the company has gained 76.8%. (Looking for the Best Stocks for 2017? Be among the first to see our Top Ten Stocks for 2017 portfolio here .)
Microsemi Corporation (NASDAQ: MSCC - Free Report ) is a leading designer, manufacturer and marketer of analog, mixed-signal and discrete semiconductors. The stock carries a Zacks Rank #2 and has a VGM Style Score of "B." Moreover, Microsemi has a long-term EPS growth estimate of 12.5% and currently trades at a forward P/E multiple of 17.6x, which is lower than the industry average of 18.0x. Year-to-date, the company has gained 71.1%.
KLA-Tencor Corporation (NASDAQ: KLAC - Free Report ) is one of the world's leading suppliers of process control and yield management solutions for the semiconductor and related microelectronics industries. The stock carries a Zacks Rank #2 and has a VGM Style Score "B." Moreover, KLA-Tencor currently trades at a forward P/E multiple of 15.1x, which is lower than the industry average of 17.1x. Year-to-date, the company has gained 14.2%.
Semiconductor companies will continue to transform our world with each passing year. So, if you don't want to be left behind, make sure you're investing in quality semiconductor stocks.
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free .
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Follow us on Twitter: https://twitter.com/zacksresearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.