1 Semiconductor Stock Worth Investigating and 2 We Question
Although these businesses have produced results lately, investors should tread carefully as not all companies are equipped for the next technological innovation. On that note, here is one semiconductor stock poised to generate sustainable market-beating returns and two we're swiping left on.
Two Semiconductor Stocks to Sell:
Magnachip (MX)
Market Cap: $96.99 million
With its technology found in common consumer electronics such as TVs and smartphones, Magnachip Semiconductor (NYSE:MX) is a provider of analog and mixed-signal semiconductors.
Why Do We Think MX Will Underperform?
Annual sales declines of 16.3% for the past five years show its products and services struggled to connect with the market during this cycle
Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 11.1 percentage points
Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $2.71 per share, Magnachip trades at 0.5x forward price-to-sales. If you're considering MX for your portfolio, see our FREE research report to learn more.
Kulicke and Soffa (KLIC)
Market Cap: $1.85 billion
Headquartered in Singapore, Kulicke & Soffa (NASDAQ: KLIC) is a provider of production equipment and tools used to assemble semiconductor devices
Why Are We Out on KLIC?
Products and services are facing significant end-market challenges during this cycle as sales have declined by 10.8% annually over the last two years
Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 23.4 percentage points
Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
Kulicke and Soffa's stock price of $35.42 implies a valuation ratio of 33.5x forward P/E. To fully understand why you should be careful with KLIC, check out our full research report (it's free).
One Semiconductor Stock to Watch:
Qualcomm (QCOM)
Market Cap: $159.2 billion
Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ:QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances.
Why Do We Like QCOM?
Annual revenue growth of 16.6% over the past five years was outstanding, reflecting market share gains this cycle
Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
ROIC punches in at 51.2%, illustrating management's expertise in identifying profitable investments
Qualcomm is trading at $147.52 per share, or 12.6x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it's free.
Stocks We Like Even More
Donald Trump's April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don't miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
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