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What are we looking for?

U.S.-listed semiconductor stocks with rising price and revenue.

U.S.-listed semiconductor stocks continue to outperform, gaining more than 56 per cent year-to-date and 20 per cent in one month alone, making it the best-performing sector in U.S. markets. The sector has seen a slight pull-back over the past few days, declining by a little more than 6 per cent, which may present an opportunity to enter a sector that has been trending higher with few down days over the past month.

The screen

Using Trading Central Strategy Builder, we began by setting a minimum threshold of US$5-billion in market capitalization exclusively in the U.S semiconductor sector. This focused our search on mid- to large-cap U.S. stocks for greater stability, liquidity, and performance history.

To ensure we focus on firms that are trending higher, we screened for stocks that are trading within 15 per cent of their 52-week high.

We added one valuation metric that may be of interest to value investors: the company’s earnings-per-share growth must be at least 15 per cent over the past five years.

Finally, we screened for the top-rated stocks using Trading Central’s Quantamental rating method. The TC Quantamental Rating is a proprietary stock-ranking methodology developed by Trading Central which covers over 50,000 stocks worldwide. This metric ranks stocks on a scale of one to 10 with 10 being the most bullish and one being the most bearish. TC Quantamental rating uses a combination of valuation, growth, quality, price momentum and income as key metrics when ranking a company. We set a minimum rating of six out of 10.

We have also included annual dividend yield, 52-week and year-to-date price performance for your reference.

More about Trading Central

Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener, is available through leading retail brokers in Canada and around the globe.

What we found

Trending semiconductor stocks

1United Microelectronics CorpUMC-N21.178.297.557.0-9.237.3626.50-4.40
2Broadcom IncAVGO-Q336.86798.357.2645.8-12.3527.2344.5040.90
3Microchip Technology IncMCHP-Q41.0575.197.2950.8-14.2418.727.105.80
4Lam Research CorpLRCX-Q82.85619.026.0328.8-4.3317.1646.7021.90
5KLA CorpKLAC-Q60.76445.696.1730.1-6.5618.0317.5024.10
6Taiwan Semiconductor Manufacturing Co LtdTSM-N473.01100.566.3923.6-7.3715.6732.404.10
8Monolithic Power Systems IncMPWR-Q23.21492.976.2443.3-11.5950.6738.409.20
9ON Semiconductor CorpON-Q36.1284.786.1917.6-6.9120.434.1041.10
10Applied Materials IncAMAT-Q111.91134.066.0618.0-3.9817.5836.9016.40
11Analog Devices IncADI-Q89.1179.527.3218.1-10.3725.248.37.80
12ASML Holding NVASML-Q284.31727.796.7324.2-3.2538.9132.328.20

Source: Trading Central

Topping our list is United Microelectronics Corp. UMC-N The company produces integrated-circuit applications spanning every sector of the electronics industry. The company has a market cap of US$21.17-billion, a low stock price of around US$8.30 CHK per share, the highest TC Quantamental Rating on our list at 7.5 out of 10, and the highest five-year average EPS growth rate on our list at an impressive 57 per cent. The stock also has the lowest P/E on our list at just 7.36.

Taiwan Semiconductor Manufacturing Co. TSM-N, a Taiwan-based company that provides integrated-circuit manufacturing services and is the largest chipmaker in the world, has the highest market cap on our list at US$473-billion. The stock is trading within 7 per cent of its 52-week high after the recent pull-back.

Lam Research Corp. LRCX-Q, a supplier of chip-wafer fabrication equipment and services to the semiconductor industry, has the highest YTD performance on our list at 46.7 per cent and is trading within 4 per cent of its 52-week high.

Applied Materials Inc. AMAT-Q, A supplier of manufacturing equipment, services and software to the semiconductor, display, and related industries, has the best one-year price performance on our list at 16.4 per cent and trading within 3 per cent of its 52-week high.

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.

Gary Christie is head of North American research at Trading Central in Ottawa.

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