Once considered to be a cash cow for investors, finding semiconductor stocks to buy and hold can be daunting these days.
The iShares Semiconductor ETF (NASDAQ:SOXX), an exchange traded fund that holds 30 leading semiconductor stocks, is down more than 30% so far this year as a chip shortage continues to stress the industry and growth stocks find it a challenge to gain momentum.
But if you’re a believer in technology and realize that semiconductors will continue to be in high demand, such a drop is pretty interesting for long-term investors
Many of these semiconductor stocks to buy and hold are on sale, and investors who buy low can see their returns supersized if they play their cards right. Other names are immune to the headwinds facing the chip industry and still have more room to run higher.
There are some indications that the chip shortage could begin to ease. The CHIPS and Science Act, passed by Congress and signed into law in 2022, is designed to increase semiconductor research and production in the U.S.
Already, companies are making plans to expand their manufacturing bases in the U.S. President Joe Biden has been busy bouncing around the country, touring semiconductor factories that he hopes will give the U.S. economy a needed boost.
Where does that leave us? It’s time to go bargain shopping for semiconductor stocks to buy and hold.
The Portfolio Grader can be a great tool to help us find the best semiconductor stocks to buy now. The Portfolio Grader is my free tool that evaluates and grades stocks based on qualitative metrics and buying momentum.
Here are seven great picks in the semiconductor space, according to the Portfolio Grader ratings.
Array Technologies (ARRY)
Array Technologies (NASDAQ:ARRY) is one of the most promising semiconductor stocks to buy and hold. It manufactures solar trackers and software that allows its customers to maximize solar energy production.
That’s been a good business for Array this year. The company’s third-quarter earnings of $515.02 million was an increase of 172.95% from a year ago. Net income of $40.82 million was up nearly 250% from the same quarter last year.
Array had no problems at all topping earnings estimates in Q3, coming in 30% higher than revenue expectations of $515.02 million. Earnings per share of 18 cents was better than the 10 cents EPS that analysts expected.
Wells Fargo analyst Michael Blum initiated coverage of ARRY stock with an “overweight” rating and a price target of $28, which represents 38% upside.
Array currently has a “B” rating in the Portfolio Grader.
First Solar (FSLR)
When you think about First Solar (NASDAQ:FSLR), you probably think first about solar power and not semiconductor stocks to buy and hold. That’s perfectly reasonable. FSLR is one of the most well-known solar stocks out there.
It’s also one of the best-performing stocks of the year. So far in 2022, FSLR stock is up by more than 75%, with plenty of reasons to think the trend will continue.
The company announced that it will invest up to $1.2 billion to scale production of photovoltaic (PV) solar modules, which could allow it to increase its power capabilities by more than 10 gigawatts by 2025.
The company says each of those modules features a layer of Cadmium Telluride semiconductor that’s thinner than a human hair. And it’s researching more ways to make products with an even thinner semiconductor layer.
The potential here is clear, particularly with the emergency of the Inflation Reduction Act in the U.S. that restores a tax credit for U.S. manufacturers that start production of PV projects before 2025.
FSLR stock has a “B” rating in the Portfolio Grader.
SunPower (NASDAQ:SPWR) provides PV solar generation systems and battery energy storage products for residential customers.
The stock has had an up-and-down 2022, currently up about 6% after showing a 34% rise through September.
In addition to getting a boost from the CHIPS Act, SunPower is expected to profit from the European Union’s mandate on solar panels for all new homes in buildings, starting in 2030.
One thing helping to boost its Portfolio Grader score is SunPower’s record of consistently beating analysts’ revenue expectations. In the third quarter, SPWR reported $475.71 million in revenue, beating expectations of $427.67 million. That was also nearly 68% better than the company’s revenue from a year ago.
EPS also was a pleasant surprise, coming in at 13 cents per share versus expectations of 8 cents.
SPWR stock has a “B” rating in the Portfolio Grader.
Cirrus Logic (CRUS)
Texas-based Cirrus Logic (NASDAQ:CRUS) develops audio semiconductors for smartphones, tablets, smart homes, wearable technology and other consumer audio products. Sales for the combined segment are estimated to top $52 billion by 2027, giving Cirrus a huge opportunity.
And to make it a little more interesting, CRUS stock is on sale. Down about 20% so far on the year, the consensus price target on Cirrus is $91.49, giving it potential upside of 23%.
The company is also doing a good job of both growing revenue and managing analysts’ expectations. Second quarter revenue of $540.57 million was 16% better than a year ago, and also 16% than expectations of $466.22 million. EPS of $1.99 trounced expectations of $1.44.
Cirrus is guiding for third-quarter revenue of $520 million to $580 million. The stock currently has a “B” rating in the Portfolio Grader.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON) is having a great second half of the year. The stock is up 36% since July, thanks in part, at least, to the fact that it joined the all-important S&P 500 index.
While much of the market is in the red, ON Semiconductor is finally showing gains, up about 3% so far on the year. In a year like this, having a stock that’s treading water is definitely better than one that’s been handing out losses right and left.
ON Semiconductor makes chips that are used in automotive, communications, computing, consumer, industrial, lighting, medical and military applications. That’s a great place to be in as companies are clamoring for semiconductors and the CHIPS Act makes buying semiconductors from U.S. companies easier.
Earnings in the third quarter continued the company’s winning ways – revenue of $2.19 billion beat analysts’ expectations for $2.12 billion. EPS of $1.45 per share was better than the $1.31 the Street expected.
ON has an “B” rating in the Portfolio Grader.
Amkor Technology (AMKR)
Amkor Technology (NASDAQ:AMKR) packages and tests integrated circuits for chip manufacturers.
The company has a pretty big footprint outside of its home base in Arizona, with factories also in China, Japan, South Korea, Malaysia, the Philippines, Portugal and Taiwan.
Although it has faced some challenges this year – the company’s operations in Shanghai were hurt by China’s extended Covid-19 shutdown – but the stock has rallied in the second half of the year, up nearly 55% since early July.
Third-quarter earnings of $2.08 billion and EPS of $1.25 per share easily beat analysts’ expectations and showed strong year-over-year growth (revenue was up 24% from a year ago, with net income of $306.1 million being an increase of 69%).
AMKR stock has an “A” rating in the Portfolio Grader.
I’m a big fan of Broadcom (NASDAQ:AVGO) stock because of its position in the 5G space.
Broadcom designs and develops semiconductors for the wireless and broadband communication industry.
That’s a great opportunity for investors because I’ve long been convinced that the applications of 5G could be life-changing. The ability to get lightning-quick internet speeds even when on Wi-Fi opens the doors for smart cities, machine learning, AI, virtual reality, and more.
Broadcom is also buying enterprise software company VMWare (NYSE:VMW) in a $61 billion deal that will allow it to expand into cloud computing. The Federal Trade Commission is still reviewing the deal.
Q3 revenue of $8.46 billion and earnings of $9.73 per share beat analysts’ expectations for $8.41 billion and $9.56 EPS. The company is expected to report Q4 earnings on Dec. 8.
AVGO stock has a “B” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had a long position in ON, AMKR and AVGO. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.