3 Buy-Rated Semiconductor Stocks Bucking Last Week’s Market Downtrend

3 Buy-Rated Semiconductor Stocks Bucking Last Week’s Market Downtrend

Posted On January 11, 2022 2:39 pm

Last week, bond yields rose on the Fed’s signal of forthcoming interest rate hikes and the continuing spread of the COVID-19 omicron variant. The S&P 500 retreated 1.9%, while the tech-heavy Nasdaq Composite lost 4.5%. The Dow Jones Industrial Index was down 0.3%.

The semiconductor industry is seeing increasing demand while chip supplies remain tight. According to a report by trade credit insurer firm Euler Hermes, global supply chain disruptions could remain high until the year’s second half. The firm also predicts that semiconductor sales will grow by another 9% and cross $600 billion for the first time in 2022.

Given this backdrop, we think the stocks of semiconductor companies VMware, Inc. (VMW – Get Rating), Dell Technologies Inc. (DELL – Get Rating), and Hewlett Packard Enterprise Company (HPE – Get Rating) might be solid bets. These stocks are rated B (Buy) in our proprietary POWR Ratings system and have delivered stable returns over the past five days, despite the broader market downtrend.


Click here to checkout our Semiconductor Industry Report for 2022

VMware, Inc. (VMW – Get Rating)

VMW in Palo Alto, Calif-, is a software provider for hybrid, multi-cloud, modern applications, networking, security, and digital workspaces. The company’s offerings include the VMware multi-cloud solutions, and it sells its products through distributors, resellers, and system vendors.

On Dec. 1, VMW announced that it had been named a leader in the IDC MarketScape: Worldwide SD-WAN Infrastructure 2021 Vendor Assessment. The recognition was accorded for its VMware SD-WAN cloud-delivered solution. Abe Ankumah, vice president of product management, secure access service edge (SASE), VMW said, “VMware, through its acquisition of VeloCloud, has a strong heritage in the SD-WAN space. We believe recognition from reports like the IDC MarketScape validate VMware as a leader for businesses of all sizes.”

For its fiscal third quarter, ended Oct. 29, VMW’s total revenue increased 11.3% year-over-year to $3.19 billion. Its non-GAAP operating income rose 5.3% from the prior-year quarter to $935 million. Its non-GAAP net income and non-GAAP net income per share came in at $725 million and $1.72, respectively, up 3% and 3.6% from the same period prior year..

The $7.28 consensus EPS estimate for fiscal 2023 indicates a 1.1% year-over-year increase. Likewise, the 13.90 billion consensus revenue estimate for the same year reflects a 7.9% improvement from its fiscal year 2022. Furthermore, VMW has an impressive surprise earnings history; it has topped consensus EPS estimates in three out of the trailing four quarters.

The stock has gained 6.8% in price over the past month and 1.9% over the past five days to close Friday’s trading session at $120.46.

VMW’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

VMW has a Value, Sentiment, and Quality grade of B. In the 62-stock Software – Business industry, it is ranked #6. Click here to see the additional POWR Ratings for VMW (Growth, Momentum, and Stability).

Dell Technologies Inc. (DELL – Get Rating)

DELL in Round Rock, Tex., designs, develops, manufactures, and sells Information Technology (IT) solutions, products, and services. The company operates through its Infrastructure Solutions Group (ISG); Client Solutions Group (CSG); and VMware segments.

On Jan. 4, DELL introduced its new UltraSharp monitor that is expected to enhance visual experiences. The product should add to the company’s revenue stream.

Last month, DELL and Amazon Web Services, Inc. (AWS), an Amazon.com, Inc. (AMZN) company, collaborated to…


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