How to Play It Smart
Whether you are just getting started or a seasoned investor, you should check out semiconductor stocks for a few reasons. Cyclical analysts are predicting a bottom for the industry, and a few stocks might be worth a second look. Below are some ways to invest in technology and keep the bank intact.
Booms and Busts of Economics
When people say “cyclical,” it refers to an industry sensitive to the business cycle, such as semiconductors. The volatility of the tech industry is often handled with layoffs such as the massive ones we have seen in recent months–these are the “busts.” However, a company can also “boost” itself in the good times by hiring in masse and paying out bonuses.
Recent Semiconductor Reports
While we saw an economically hard blow to the semiconductor industry at the beginning of the pandemic, we saw a boom in chip sales. However, we are in the bust phase now. For instance, “Five-star analyst Vijay Rakesh, of Mizuho Securities, says that we are approaching a bottom, and he predicts a turn for the better soon.
Rakesh explains in Market Insider, “We see improving structural trends driving an accelerated path to supply/demand balance for Memory, Rakesh noted. Near-term headwinds remain with high inventories and 1Q23E PCs/ Handsets/Servers expected down 20%/20%/10% q/q, and Memory pricing down 10% YTD; however, we are close to a cyclical bottom. 1Q23 could see the peak in inventories and a trough in revenue, with fundamentals set to recover in 2H23E/2024E.”
Stocks You May Want to Keep an Eye On
- Micron Technology: (MU) Analysts believe this $65 billion player in the memory chip segment, capex cuts supply a multi-year low and 2H rebound along with improving investor sentiment position. Combined with the Buy rating, Rakesh gives MU stock a $72 price target, implying a ~20% upside for the coming year.
- Western Digital: (WDC) Prominent in the cloud storage and data center industries, this is where WDC holds a strong position. Rakesh gives WDC shares a $50 price target to back his Buy rating. That figure implies a ~16% upside from current levels.
- Seagate Technology: (STX) A $14 billion player in cloud and data centers, specialized drives, and personal storage. Rakesh suggests not throwing the towel in on STX just yet. This is another chip stock that Rakesh has upgraded to Buy, and his price target here, $82, indicates potential for a 15% upside over this year.
PCX has grown 80 to 100 percent per year for the last three years and has kept up a torrid growth in jobs, top-line and bottom-line growth, and opportunities for refreshing careers in a field that is one of the most exciting and compelling on the planet. We love all things semiconductors and technology. We serve the government, military, and information technology industries.
If you are frustrated by the de-commits and non-delivers from factories, irritated with poor vendor communication, and concerned with long lead times and obsolescence challenges, check out our inventory today to help you prosper.
Disclaimer: All stock advice is simply an opinion of the writer and not actual advice on how to invest your money or in the stock market.