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3 Under the Radar Semiconductor Stocks

MarketBeat - Mon Aug 14, 10:30AM CDT

Semiconductor stocks

If you are unfamiliar with silicon carbide, it is time to get up to speed. Silicon carbide is conductive silicon for semiconductors (NASDAQ: SOX). Some disadvantages versus traditional silicon wafers, including costs, make it less than ideal for mainstream applications, but multiple advantages make it an ideal material for industrial applications. Those include higher operating temperatures, less cooling needs, higher efficiency, faster switching speed, and ruggedness in high-energy situations. 

Among the many use cases for silicon carbide semiconductor material is in the EV world, which relies heavily on charging and fast-charging stations, among other specific power-control needs. In those use cases where SiC is best-suited, cost becomes a non-issue because of the material's efficiency and ruggedness; businesses save money over the long term. 

Evidence of the growing need for silicon carbide is seen at the University of Arkansas. The University of Arkansas broke ground for a new SiC-specific facility aided by NSF and Army Research Laboratory investment. The facility will be a national SiC research and fabrication center with equipment and labs to aid development from idea to production.

The intent is to help re-establish the US as a leader in semiconductor technology and facilitate onshoring of semiconductor manufacturing. 

Navitas Semiconductor Corporation - Niche Player In Niche Market 

Navitas Semiconductor Corporation (NASDAQ: NVTS) is a small player in a niche market, but this market is worth more than $1 billion and is growing at a 20% CAGR. Navitas makes gallium nitride semiconductors and SiC and the associated high-speed system controllers to go with them.

Its products are used in power conversion (think solar, among other applications) and charging. Products are used in end markets ranging from mobile to consumer, EV, industrial, and the power grid. Several new clients, including EV charging networks, recently supercharged the company’s revenue. Revenue roughly doubled over the past year and should remain solid for the foreseeable future. 

Navitas Semiconductor Corporation stock chart

STMicroelectronics Is Expanding Its SiC Footprint 

STMicroelectronics (NYSE: STM) is a Swiss-based semiconductor company focused on automotive and industrial end markets. Its silicon carbide solutions were among the first to market, and the company has the widest offering of SiC products today. Demand for SiC solutions spurred the company to expand its footprint in that arena which should begin paying off in early 2024. Among the growth plans is expansion into the aerospace arena. Among the many applications the company provides today are solutions for EV charging and solar inverters. 

The company’s growth slowed from the high-double-digits to low-double-digits in 2023 but is expected to remain solid. The stock trades at a deep value relative to the higher-flying names at only 11X its earnings. Based on next year's Marketbeat.com consensus, the copay will likely beat estimates. 

STMicroelectronics stock chart

ONSemi: On Target With SiC 

ONSemi (NASDAQ: ON) underwent a refocus a few years ago that is paying off. The focus shifted to automotive and industrial markets, including the budding opportunity in SiC. SiC was and is not the company’s main business but an opportunity it is taking advantage of.

The Q2 sales and earnings beat the consensus estimate on strength in automotive and industrial. Automotive sales hit a record, and industrial grew by 5%, underpinned by a 4X increase in SiC. ONSemi is viewed favorably by analysts. 27 rate the stock a Moderate Buy, and the price target is trending strongly higher.

The price target assumes about 16% of upside with shares near $94; it is up 20% since the Q2 report was released and 1 of Marketbeat’s Most Upgraded Stocks. 

Onsemi stock chart

The article "3 Under the Radar Semiconductor Stocks" first appeared on MarketBeat.

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